January 23

Small Business Health Care Tax Credit – 4 Tips You Need to Know


Finding affordable health care coverage can be a struggle for many business owners. Being knowledgable in the small business health care tax credit can be helpful when determening what kind of health care coverage your small business might need.

I am personally not to that point in my business yet, but it is good to have a working knowledge of small business healthcare and the tax credit for future reference.

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Guest contributor Emily Bartels joins us here today to share her tips on how to navigate the small business health care tax credit.

What is the Small Business Health Options Program (SHOP)?

The small business healthcare tax credit is available for the employers running the small business and paying the premiums of health insurance in support of employees registered in the qualified plan of health offered through the Small business health options program (SHOP) marketplace.

The small business healthcare tax credit was formed under the act that is Patient Protection and Affordable Care Act (PPACA) for giving the small business and organizations tax exempt on the price of group health insurance for their employees.

The health care tax credit for small businesses consents a lot of small companies for claiming the credit insurance premiums for their staff. SHOP or small business health option plans is the segment of real exchange.

Most of the people have a preference of having their health insurance through their employment place.  The health exchange has taken a step for persuading the small businesses to offer their employees with the coverage of group.

If you are a small business and want to know about the healthcare tax credit, then you require going through the post.

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How can small business enroll in the SHOP?

There are primary qualifications for small businesses that they need to ensure while enrolling in the plans of SHOP.

  • Firstly, it is relevant that the small business must have around 1 to 50 full-time equivalent employees (FTEs). If any small businesses want to ensure that whether they qualify for the tax credit or not, then they should use the FTE calculator. It is also relevant to note that to ensure eligibility for SHOP, small business should have at least 1 FTE employee other than spouses, family members of owners, owners and partners.
  • Small business must ensure offering the coverage to all the full-time employees who are working around 30 hours per week in general. They don’t have to provide any coverage to the part-time employees who are working less than 30 hours per week and are seasonal workers. Though, they can provide coverage to the part-time staff if they choose.
  • Small businesses can register around 70% of the employees for offering insurance to their employees with other health coverage. These businesses can also make use of the SHOP minimum participation rate calculator for seeing how many your staff should accept.
  • It is essential that the company should qualify employer should pay average annual wages below $ 50,000 for a worker that is full-time.
  • Small businesses should be eligible for a credit of around 35 percent of premium costs for 2010, 2011, 2012, 2013, and in the year 2014, it enhances to 35 percent.

What are the benefits of SHOP enrolment for small business?

Several small businesses can be eligible for SHOP tax credits and premium assistance programs for offsetting the costs of confirming staffs. Small businesses buy the plans of SHOP can qualify for the tax credit if they have lesser than the 50 employees and have an average staff salary of $ 50, 000 per year. Small businesses can also register in the coverage of SHOP at any time during the year, making them the option that is of flexible insurance for staffs. SHOP insurance offers staff with necessary benefits like preventive care, services that are outpatients, prescription drug treatments, and emergency care.

SHOP or small business healthcare tax credit option plans defined as a plan that offers businesses with around 1 to 50 staff with the benefits of health and dental. This plan makes use of the structure that is of metal-tier just like individual plans of health for determining the benefits and rates for cost sharing.

The plans of health can be used as the plans for medical, dental, and combination health plan. For instance, an owner could buy the idea of SHOP for enhancing their package of benefits.

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Tips for the small business healthcare tax credit

Here are the tips that small business can follow for the healthcare tax credit:

Offer several plans

Even if you are a small business, it doesn’t mean that you require offering only one kind of scenario. As an alternative, you can ensure signing up for letting every employee select the best type of plan, such as HMO, PPO or HSA.

It makes the health insurance or tax credit for small businesses suppler and provides the staff perks they may only anticipate from a more significant business. The owner who intends for offering just one kind of plan can do that, but several discover that having various types is a primary perk for staffs.

Several options for funding

As an owner of a small business, you don’t inevitably have to go to the financing that is typical with the premium set on a monthly basis. One method you can do is having your plan self-funded that means you are paying the claims that are amount-based insured staffs make in its place for a cost that is balanced.

Potential tax credit

It is imperative for a small business owner that they must confirm of being eligible for claiming a tax credit to pay at least half of the costs of health insurance for their staffs. Their tax credit is accessible to small businesses with around 25 to 50 employees and the average wage of $50,000.

The credit is around 35 percent premiums that can consider eliminating the health insurance cost for the businesses. Furthermore, the other 65 percent of premiums that are paid and is deemed to be eligible for the deduction of tax and expense.

An option of Flex plan

Small businesses can integrate any health insurance type that consents the staff for setting aside a particular dollar amount of every paycheck and put forward for compensation from the supply of spending.


Small business healthcare tax credit options plan offers a small business with health benefits. It is one of the best options which allow small businesses for providing the options to employees that can oblige in the aspect of health.

Small business should follow the eligible criteria and should follow the tips that are elaborated above.

Emily loves to write on issues related to health. She has been in this industry for 5+ years and specializes in writing educative content on Health. She loves to read trending news to keep her updated!


health care, SHOP, small business, tax credit

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