Blog

The Patient Protection and Affordable Care Act, the new federalhealth insurance law enacted on March 23, 2010, provides fortax credits for eligible small employers, including non-profits,for health insurance premiums paid for employees. The Centerfor Non-Profits, along with the National Council of Nonprofits,Independent Sector and other advocates, fought hard forinclusion of non-profits in the tax health care credit for small employers.

In order to be eligible for a tax credit:

• The employer must pay at least half of the insurancepremiums for at least some employees at the single(employee-only) coverage rate.
• The number of FTE’s (full-time equivalent employees)must be fewer than 25; and
• The average annual wages per employee must be lessthan $50,000.

Eligible tax-exempt organizations can take a credit of upto 25% against the employer portions of Medicare andemployee’s income taxes withheld from the employee.Employers with fewer than 10 employees and less than $25,000 annual wages per employee will qualify for thehighest credits. Other requirements apply.

The tax credit will be available beginning with the 2010 taxyear. The IRS has begun publishing general informationabout the tax credit, and additional guidance for tax-exemptemployers will be forthcoming. To find out if your organizationmight qualify, see the following IRS Web pages:
IRS Small Employer Health Care Tax Credit Announcement Page: www.irs.gov/newsroom/article/0,,id=220809,00.html
IRS FAQ’s about the tax credit: www.irs.gov/newsroom/article/0,,id=220839,00.html
IRS “3 Simple Steps” Worksheet for small employers: www.irs.gov/pub/irs-utl/3_simple_steps.pdf