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Which Businesses Are Eligible for Health Insurance Tax Credit?


Image: eneas under CC 3.0

One of the near-immediate benefits of healthcare reform is the creation of tax credits for small businesses, meant to encourage them to offer health insurance coverage to their employees.

The government has released guidelines detailing which companies are eligible for at least a partial subsidy. They are those that have:

  • Under 25 employees, and
  • an average salary less than $50,000 per year

However, in order to take advantage of the full 35% tax credit offsetting health insurance plan premiums, firms must have:

  • Fewer than 10 employees, and
  • an average annual salary under $25,000

Some small businesses believe that it’s a perverse incentive, given the fact that some companies would have to fire workers or cut their pay in order to become eligible.

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