Most small business owners want to offer their employees a health benefits program. I have talked with many individuals who understand the benefits to their employees of health care security. A primary obstacle to offering a health insurance plan to small business workers is usually the cost. Now, with the Affordable Care Act, tax credits are available to reduce the overall cost to small employers of group health insurance. Here’s how they work:
Which Small Businesses Are Eligible?
DC Health Link is the online health insurance marketplace for individuals, families, and small business owners in the District of Columbia. Small business owners can obtain group health insurance through DC Health Link. To be eligible, a District employer must:
- Have fewer than 25 full-time equivalent employees (FTEs);
- Have average employee wages (AAEW) of less than $50,000 a year;
- Purchase coverage through DC Health Link;
- Pay at least 50% of the cost of single coverage for each employee.
There is no credit if the full-time equivalent employees exceed 25 or the AAEW exceeds $50,000.
How Much is the Tax Credit?
The credit percentage that can be claimed varies with the number of employees and average wages. The full amount of the credit is available only to an employer with 10 or fewer full-time equivalent employees and whose employees have average annual full-time equivalent wages (AAEW) from the employer of less than $25,000.
Any small business owner can use the Small Business Tax Credit Calculator available on the DC Health Links website to calculate their tax credit.
What Help is Available to Set Up a Group Benefits Plan?
Health insurance brokers are available to work with small businesses to understand the options and make decisions about health benefits. DC Health Link certified brokers have the training and expertise to be able to serve small business needs. Employers can choose among DC Health Link certified health insurance brokers to help with plan selection and enrollment at no cost.
As a health insurance broker with the exchange service, I can navigate the system for you, find your best options, review and discuss them with you. I will then do most of the work to get things set up according to your choices. When it comes time for annual renewal, I will be there to keep that simple too. If you live in Washington, DC and need the services of a certified registered broker with DC Health Link, contact me.
Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.