The Small Business Health Options Program (SHOP) opens in October 2013, connecting qualified employers to a new way to compare and buy health insurance. The counterpart to the individual marketplace, SHOP creates a large purchasing pool so small businesses can benefit from many of the advantages large employers enjoy.
The idea is to encourage more small businesses to offer health insurance to their employees, increasing the number of Americans who have coverage. To make coverage more affordable, tax credits are available to eligible small businesses that buy through the SHOP.
Health Net is providing a high-level overview of the tax credit, but we encourage our customers and brokers to use the IRS and HealthCare.gov as official resources:
Small businesses eligible for tax credits are those that:
Small businesses that qualify for the full tax credit amount available are those with fewer than 10 full-time employees whose average wage is less than $25,000.
Tax Credit Amounts
The tax credit amount depends on factors such as the number of full-time employees and the amount of the employer’s premium contributions. The tax credit is a percentage of insurance premium expenses.
|Maximum Tax Credit by Tax Year|
|Small business employers||35%||50%|
|Small business tax‑exempt employers (e.g., charities)||25%||35%|
Also changing in 2014 is that the tax credit is only available to small businesses that participate in the SHOP.
Several organizations have online calculators to determine tax credit eligibility and estimate amounts:
Again, the IRS has extensive guidance on other details such as how to claim the tax credit. Health Net does not provide tax or financial advice. We recommend that employer groups consult with their legal and financial advisers.
To provide you with the most accurate plans and information in your area, we need to know your location. Please enter a ZIP code for Arizona, California, Oregon, Washington.
To provide you with the most accurate plans and information in your area, we need to know your location. Please enter a ZIP code for Arizona, California, Oregon, or Washington.