Small Business Health Care Tax Credit

It’s a pleasure to forward a Small Business Health Care Tax Credit tool from one of our carriers, United Healthcare. The tax credit modeling tool helps you determine if you are eligible for the credit and estimate the potential credit amount.

Tax Credit Background
The Small Business health Care Tax Credit is available to employers with less than 25 FTEs earning average annual wages less than $50,000. Employers must pay at least half the cost of single coverage for their employees. The tax credit was:
  • Developed to encourage small businesses and tax-exempt organizations to offer health insurance coverage.
  • Targeted specifically to organizations that employe moderate and low-income workers.
  • May enable eligible employers to expand their benefit plans to include specialty benefits, and potentially offer a richer plan to their employees.

Tax Credit Tool Functions
This simple, easy-to-use Small Business Health Care Tax Credit tool can help determine eligibility for the credit, based on:

  • Number of FTEs employed
  • The average annual wages of FTEs
  • Annual employer premium payments.

If the employer meets eligibility requirements, the modeling tool uses the state-specific average premium amount to calculate the estimated credit amount.

The maximum credit is worth up to 35 percent of a company’s premium costs in 2010 (25 percent for tax exempt employers). The credit gradually phases out for employers with 10-25 FTEs with average wages between $25,000 and $50,000.

The modeling tool is for illustrative purposes only, and does not constitute legal or tax advice. Association Health Plans and UnitedHealthcare do not warrant or certify the results of using the tool. Employers should consult their own tax and legal representatives before finalizing any plans based on the use of this tool.

For more information about the tax credit program, including forms and instructions for claiming the credit, visit the IRS website.

Thank you for allowing Association Health Plans to assist with your employee benefits.


Matthew Spencer

Association Health Plans Insurance Organization