The Patient Protection and Affordable Care Act – Health Insurance Tax Credit.


The Patient Protection and Affordable Care Act  is the new health care law. The law contains provisions to make health insurance more affordable for both businesses and employee. The provision includes a small business tax credit to offset the cost of health insurance premium, when firms offer insurance coverage for their workers started in 2010 and continues in 2011 to 2014.

Small employers that provide health insurance to their employees will be eligible for health insurance tax credits to offset their premium costs. In 2012 and 2013, the legislation provides tax credits for up to 35 percent of the employer premium contribution. The employer contribution must be at least 50 percent of the full premium.

The employers that are eligible for the health insurance tax credit are employers with fewer than 25 employees and average wages below $50,000. The full 35 percent tax credit is available to employers with 10 or fewer full-time employees and average wages of $25,000 or less and phases out for larger firms.

Beginning in 2014, the full tax credit will cover 50 percent of employers’ premium contribution for up to two years. This credit will be available to small businesses with fewer than 25 employees and average wages below $50,000. To be eligible for the credits, small employers must offer their employees’ health plan options through the new insurance exchanges. The full 50 percent tax credit, like the 2010–2013 tax credit, will be available to firms with 10 or fewer workers and with average wages of $25,000 or less, and will phase out for larger firms.