According to a recent U.S. Chamber of Commerce survey, nearly one in four employers remain confused how the Affordable Care Act (ACA) will affect them.
For example, under a new ACA regulation, businesses with fewer than 25 employees, who make less than an average of $50,000 a year, can qualify for a maximum 50% tax credit to offset the cost of health insurance premium contributions they make for their employees. If an eligible company didn’t owe tax during the year, it can carry the credit back or forward to other tax years, What’s more, if the premium contribution comes to more than the total credit, the firm can still claim a business expense deduction for the amount in excess of the credit. In other words, it will enjoy both a credit and a deduction for these payments.
According to the IRS, here are other key points under the new regulation:
- To be eligible, an employer must cover at least 50% of the cost of individual (not family) health care coverage for each employee.
- The business must pay premiums on coverage purchased through a health insurance exchange, otherwise known as the Small Business Health Options Program (SHOP). These are online marketplaces, run by states, with or without direction by the federal government, where individuals and employers can research and buy coverage.
- Businesses with employer-sponsored health plans that don't begin on January 1 will be eligible for the tax credit if they buy coverage for their workers through an exchange at some point during 2014.
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