With the January 1, 2014 insurance deadline just around the corner for, well, everyone; small businesses may have an easier time providing coverage for their employees than one might think. The opening of the statewide health marketplaces are specifically designed for small businesses to choose the health care plan that will best fit their employees. In addition, many small businesses may be eligible for a health care tax credit to help offset the cost of coverage.
On October 1, the Michigan Health Insurance Marketplace became active through SHOP (Small Business Health Options Program). This website is a step by step walkthrough that allows small businesses with under 50 full-time equivalent employees to select the best plans if they choose to offer insurance for their workers, which they are not mandated to do. The Marketplace offers affordable plans that are not inflated by larger companies and businesses. Essentially, it evens the playing field for smaller businesses to provide health insurance coverage for their staff.
For those businesses with fewer than 25 full-time equivalent employees, you may qualify for a small business health care tax credit. Employees must make an average of $50,000 a year or less. According to the Bureau of Labor Statistics in 2012, the mean salary of an employee working at a small home furnishings store is about $27,000, and the mean for building cleaning workers $23,970, both well under the $50,000 average. To be eligible for the credit, a small business employer must pay premiums for all employees enrolled in a health plan through the SHOP Marketplace.
The tax credit amount for smaller businesses will depend on the contribution to employee premiums made by the employer. If you have 10 employees in your business who make roughly $25,000 a year and you, as an employer, contribute collectively $70,000 to your employees’ premiums; your tax credit amount will be $35,000. The credit amount is 50% of the amount the employer puts towards premiums. Not a bad trade-off for supplying employees with better quality benefits.
It is important to stay educated on the taxes and credits that come along with the Affordable Care Act. To learn more about if your small business will qualify for a tax credit, visit www.HealthCare.gov.