How Small Employers Can Save Money With New Health Care Tax Credit

  • Posted by Michael Beauchemin on Wed, May 11, 2011 @ 10:21 AM

    Are you a small employer and have fewer than 10 full time employees whose wages average less than $50,000 per year?  If so, you can save money in 2010 and even more money in future year. 

    Eligible small employers may receive up to a 35% tax credit on the portion of the premiums paid for employees in 2010.  Even better news for small business owner’s is that this credit is scheduled to increase to 50% by 2014.

    Now the details.  The credit starts to phase out at more than 10 full time equivalent employees and/or when the average salary for your full time equivalent employees (FTE) exceeds $25,000.  At 25 FTEs the credit is phased out or if the average wage for your FTEs exceed $50,000. 

    A Full Time Employee (FTE) is defined  as either a full time employee who works 40 hours per week or multiple part time workers whose hours add up to 40 hours per week. 

    When determining FTEs seasonal workers are typically excluded, unless they work for an employer more than 120 days during the year.  A seasonal worker is defined as a worker who performs labor or services on a seasonal basis as defined by the Secretary of Labor.  This would include workers employed during the holiday season. 

    To learn more about the Healthcare Tax Credit download our Healthcare Tax Credit Guide.