Many small businesses and tax-exempt organizations, including churches, that provide health insurance coverage to their employees qualify for a special tax credit authorized by the Affordable Care Act. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.
For tax years 2014 or later, there are changes to the credit:
- The maximum credit increases from 35 percent to 50 percent of premiums paid for small business employers and from 25 percent to 35 percent of premiums paid for small tax-exempt employers.
- To be eligible for the credit, a small employer must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace or qualify for an exception to this requirement.