The Affordable Care Act: Questions for Employers Regarding California Health Insurance
Many small businesses are afraid that the Affordable Care Act will bankrupt their companies. However, the new reform bill will actually provide several benefits for small businesses. Each small business that begins offering coverage this year will receive a tax break. The amount that can be credited on the company tax return will vary based on the number of employees in the company, and the amount the employees are paid.
What is the Definition of a Small Business?
In order to receive the small business tax credit your company must employ less than 25 full time workers. This number can be an average of all of your employees. For example, if you have twenty five full time employees you are paying for 25 workers at 40 hours per week. This equals a total of 1,000 hours each week. You could hire more employees at part time and still receive the credit. However, you cannot use more hours than you would to employ 25 full time workers. You are also required to pay at least half of each employee’s California health insurance premium in order to qualify.
How Much Will My Tax Credit Be for Offering California Health Insurance?
Businesses that employ less than ten workers, with an average annual wage of less than twenty five thousand will qualify for a 35% tax break. Non-profit organizations with the same employees can get a 25% tax credit. As the number of employees goes up to 25, and the average wage increases to $50,000 your business can receive a tax break according to a sliding scale. However, in 2014 the maximum tax credit available for small businesses will increase to 50%. The amount available for nonprofit organizations will increase to 35%.