The Taxpayer Advocate Service developed the Small Business Health Care Credit Estimator to help you find out whether you're eligible for the Small Business Health Care Credit and how much you might receive.
The Small Business Health Care Credit is designed to help you provide health insurance coverage to your employees. For tax years 2010 through 2013, the credit can be up to 35% of your share of your employees' health insurance premiums; or, if you're an eligible tax-exempt employer, up to 25% of your share of premiums.
You are an eligible small employer for the tax year if you meet these three requirements.
For tax years 2014 and later, there are changes to the credit:
If you have tax questions about the Small Business Health Care Tax Credit, or need assistance completing the necessary forms, call the IRS Business Help Line at 1-800-829-4933. IRS assistance is limited to tax law questions and help with forms. The IRS does not provide any technical support or assistance for this tool.
This tool is intended to help small businesses and practitioners determine their eligibility for the credit and the possible amount of the credit. Primarily, you may qualify for the credit if you can answer "yes" to these questions:
This tool can help you estimate it. However, this estimator does not determine:
The estimator will help estimate the credit based on the information you enter. To claim the Small Business Health Care Tax Credit, you must complete and attach the appropriate Form and file it with the IRS.
The credit provided by the estimator is based on the information you entered. We can't guarantee the amount without a complete review of your situation.
To use the estimator, you'll need certain information, including:
You can find a complete list of what you need to claim the credit in the information needed section of the estimator's instructions. You can get more information and IRS resources at Small Business Health Care Tax Credit for Small Employers and from the Affordable Care Act Tax Provisions.
To protect your and your employees' privacy, the tool requests only the information needed to estimate your credit. It does not ask for any personal information, such as names or Social Security numbers. This tool uses session cookies to temporarily store the data you enter and they are removed when you close your browser.
If you stop and close your browser before completing all the steps, you will need to start over.
A qualifying arrangement generally requires you to pay a uniform percentage (not less than 50%) of the premium cost for each enrolled employee's health insurance coverage. An arrangement that offers different tiers of coverage (for example, self-only, self-plus one, and family coverage) is generally a qualifying arrangement if it requires you to pay a uniform percentage (not less than 50%) separately for each tier of coverage you offer.
However, an arrangement can be a qualifying arrangement even if it requires you to pay a uniform percentage that is less than 50% of the premium cost for some employees. It is a qualifying arrangement if you are paying a uniform amount that is at least 50% of the cost of your employees' self-coverage, even if some of your employees are enrolled in more expensive tiers.
There are special rules for tax years beginning in 2010 and for multi-employer health and welfare plans.
As part of the qualifying arrangement requirements, you must pay the same percentage (or amount) for each of your employees enrolled in coverage.
A qualifying arrangement includes any arrangement that requires you to pay at least 50% of the premium cost for single (employee-only) coverage for each employee enrolled in any health insurance coverage you provide to employees, even if these contributions don't represent the same percentage of the premium for all of these employees. If an employee receives more expensive coverage (such as family coverage), it's still a qualifying arrangement if the employer pays at least 50% of the premium for single coverage even if that is less than 50% of the actual premium for the employee.
In addition, certain employers who don't satisfy the above rule (because they contribute less than 50% of the employee-only premium for some enrolled employees) may still qualify for the credit under other rules for qualifying arrangements. This may include, for example, employers who offer more than one type of health insurance coverage or whose insurance provider doesn't charge the same premium for all employees enrolled in single (employee-only) coverage.
Your credit is reduced if your premiums paid are more than the premiums you would have paid if your employees enrolled in a plan with a premium equal to the average premium for the small group market in the state in which your employee works.
In general, all employees who perform services for you during the tax year are taken into account in determining your FTEs, average annual wages, and premiums paid. Rules that apply to certain types of employees are discussed below.
Excluded employees. The following individuals are not considered employees for purposes of this credit. Do not count hours and wages of these employees and premiums paid for them when you estimate your credit.
For credit purposes, health insurance coverage means benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health insurance provider.
A health insurance provider is either an insurance company or another entity licensed under state law to provide health insurance coverage.
Health insurance coverage also includes coverage under the following plans.
In addition, health insurance coverage includes the following.
Health insurance coverage does not include the following benefits.
Also, because the coverage must be offered by a health insurance provider as discussed above, health insurance coverage does not include benefits provided by the following.
However, health insurance coverage may include coverage under the following plans.