A reminder for all small businesses that provide health insurance to employees: You may qualify for a credit up to 35% of the premiums you paid this year. Next year, the credit will rise to as high as 50%. The full credit is available only to firms with 10 or fewer full-time-equivalent employees and average wages of $25,000 or less. It falls rapidly for firms with more employees and higher pay, completely phasing out for businesses with more than 25 workers or average pay excess of $50,000.
Employers must contribute at least 50% toward the cost of coverage to get the credit. The amount of premiums paid in excess of the credit is a deductible business expense. Tax-exempt groups are eligible for a credit of up to 25%…35% next year. Self-employees do not get credit for the cost of covering themselves, only for the cost of covering their employees.
The same goes for partners, owners of 5% or more of regular corporations, and more than 2% of shareholders of an S corporation.