Health Insurance for Small Businesses

Health Insurance for Small Business

Listed below are resources for small businesses regarding the Affordable Care Act of 2010.  You'll find information on the Small Business Health Care Tax Credit as well as a tax credit calculator to help you determine how your small business is impacted and addtional information on eligibility, guidelines, scenarios and FAQs.


FACT SHEET: Small Business Health Care Tax Credit

Health care reform includes a Small Business Health Care Tax Credit to help small businesses afford the cost of covering employees.

Key Facts about the Small Business Health Care Tax Credit

  • The tax credit, which is effective immediately, can cover up to 35 percent of the premiums a small business pays to cover its workers. In 2014, the rate will increase to 50 percent.
  • The non-partisan Congressional Budget Office estimates that the tax credit will save small businesses $40 billion by 2019.
  • Both small for-profit businesses and small not-for-profit organizations are eligible

Available Immediately.  The credit is effective January 1, 2010.  As a result, small businesses that provide health care for their workers will receive immediate help with their premium costs, and additional firms that initiate coverage this year will get a tax cut as well.

Broad Eligibility.  The Council of Economic Advisors estimates that 4 million small businesses are eligible for the credit if they provide health care to their workers.  Qualifying firms must have less than the equivalent of 25 full-time workers (e.g., a firm with fewer than 50 half-time workers would be eligible), pay average annual wages below $50,000, and cover at least 50 percent of the cost of health care coverage for their workers.

Substantial Benefit.  The credit is worth up to 35 percent of a small business’s premium costs throughout 2010-2013.  On January 1, 2014, this rate increases to 50 percent.

Firms Can Claim Credit for Up to 6 Years. Firms can claim the credit for 2010 through 2013 and for any two years after that.

Non-Profits Eligible.  Tax-exempt organizations are eligible for a 25 percent tax credit throughout 2010-2013.  In 2014, this rate increases to 35 percent.

Gradual Phase-Outs.  The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

Premium Cost Eligibility.  To avoid an incentive to choose a high-cost plan, an employer’s eligible contribution is limited to the average cost of health insurance in that state.


Additional Links from the Small Business Majority

Small Business Majority FAQ: Geared for small business owners here are the most frequent questions and answers small business owners are asking.  Both as interactive and PDF.

State Small Business & Healthcare Reform Reports: Two-page state reports summarize facts on small businesses for each state – includes the cost of doing nothing, small business opinion research, key economic data on small businesses, healthcare reform facts.