Resources

Health care tax credit eligibility FAQ


Question:  What is the calculation for determining if my company may be eligible for the new health care tax credit?

Answer:  The new healthcare reform law makes tax credits available to certain small employers.  The tax credit is up to 35% of the employer contribution to health insurance premiums, but to be eligible there are several hurdles, including:

  • The company must have fewer than 25 employees (not including the owner and owner’s family members) and the number is calculated as follows:
  1. Employer counts all hours worked by all full-time and part-time employees (not to exceed 2,080 for any worker, and not including seasonal employees working fewer than 120 days per year).  
  2. The total hours worked is then divided by 2,080.
  3. The resulting number (rounded down to the nearest whole number) from the above calculation is the number of employees that should be used in determining eligibility.
  • The average wage must be less than $50,000 (not including the business owner and family members).
  • The business must contribute a uniform percentage of at least 50 percent of the premium cost for the employee only.
To receive the full tax credit, the company must have fewer than 10 employees and the average wage must be under $25,000.  Companies with 11 – 25 employees and wages under $50,000 are eligible for partial credits.

Following are a couple of examples on the calculation of the number of employees:
Example 1:
In the 2010 tax year, DEF Fiberboard Company has:
  • 7 full-time employees each working 2,080 hours per year - for a total of 14,560 hours
  • 3 part-time employees each working a total of 1,040 hours per year -  for a total of 3,120 hours
  • 1 part-time employee working a total of 780 hours per year
Therefore, 14,560 + 3,120 + 780 = 18,460.  18,460 divided by 2,080 = 9.0049 FTE rounded down to 9 FTE.  In this example, DEF Fiberboard Company would be eligible for the full tax credit (assuming they meet the other criteria).

Example 2:
In the 2010 tax year, GHI Industries has:
  • 7 full-time employees each working 2,080 hours per year – for a total of 14,560 hours
  • 4 part-time employees each  working a total of 1,500 hours – for a total 6,000 hours
  • 4 part-time employees each working a total of 1,040 hours – for a total of 4,160 hours
Therefore, 14,560 + 6,000 + 4,160 = 24,720 hours divided by 2,080 = 11.88 FTE, rounded down to 11 FTE.  In this example, GHI would be eligible for a partial credit (assuming they meet the other criteria).

The tax credit is nonrefundable for for-profit companies and is taken on your annual corporate tax return. It may be carried back one year or carried forward 20 years.  For tax exempt organizations, the tax credit reduces payroll taxes (Employee federal withholding, Employee Medicare tax, Employer Medicare tax).
The tax credit is available for tax year 2010 at a maximum rate of 35% and increases in 2014 to 50% (35% for tax exempts) if coverage is purchased through the Exchange and lasts for two years.  The credit is also capped by the average premium paid in the small group market based in the state. 

Now,  what about the wages calculation?  Again using DEF Fiberboard Company, their 9 FTEs have average annual wages of $24,000 (excluding owners and family members).  DEF paid $81,000 in health care premiums.  They meet the criteria for number of employees and average wages and, for this example, we will assume they pay 50% of the premium as well.  DEF’s tax credit would be:
  • 35% X $81,000 = $28,350.
Now, let’s use GHI Industries and their 11 FTEs.  Assume an average annual wage of $30,000 and health care

Be an informed voter in the Aug. 3 Primary. SBAM can help!



The Small Business Association of Michigan’s Small Biz PAC has endorsed candidates for Michigan State House and State Senate races.


In this audio podcast, Michael Rogers talks with Director of Government Relations Mike Batterbee about how the candidates were selected and why they deserve the support of small business voters in the Aug. 3 primary.


Gubernatorial candidates

Six of Michigan’s gubernatorial candidates each made a five-minute presentation at SBAM’s annual meeting in East Lansing on June 24. Watch the video by clicking the links below:

 


Note: SBAM has not endorsed a gubernatorial candidate for the Primary Election.


More Election Resources

  • MiVote.org is a non-partisan, interactive, video-based website that informs and engages both the citizens of Michigan and the candidates running for every major political office. MiVote.org allows Michigan citizens to connect directly with candidates, share their opinions, debate fellow voters and upload their own opinion videos.
  • The Center for Michigan has this article on how each of the gubernatorial candidates say they will reform Michigan.

 




Score Cards and White Papers: Read here to learn more about how SBAM is helping to shape the future of Michigan’s economy

The Small Business Association of Michigan has launched a major new initiative entitled Propelling a New Economic Direction for Michigan. This new economic direction focuses on entrepreneurial growth, small business job creation and a new state focus on economic gardening. The initiative will aggressively hold the new governor and legislators accountable for supporting home-grown small business job providers.

 


Learn more by clicking on the links below. And bookmark https://www.sbam.org/Action/ for updates on our efforts.

 



Looking for ideas on how to contain your healthcare costs? Attend the Michigan Purchasers Health Alliance Conference Sept. 23 in Ann Arbor

The Michigan Purchasers Health Alliance Conference in Ann Arbor will be held on Sept. 23, 7 : 30 am – 4 pm at Washtenaw Community College Campus - Morris Lawrence Building, Ann Arbor.

 


This year's theme is titled “Local Healthcare Reform : Cost Containment Opportunities for Employers” with the Keynote Address : “The Impact of Health Reform on Coverage in Michigan ” Marianne Udow-Phillips, Director Center for Healthcare Research and Transformation. Specifics on healthcare reform issues for employers will be presented by Peter Pratt, CEO Public Sector Consultants. A panel of local healthcare experts will discuss their perspective of Healthcare Reform. Cost containment and monitoring tools will demonstrate opportunities for cost savings.

 


Registration information available here.

 


SBAM issues “Propelling a New Economic Direction for Michigan” White Paper

As part of its ongoing public policy initiative geared to revitalizing Michigan’s economy, the Small Business Association of Michigan (SBAM) today issued a “Propelling a New Economic Direction for Michigan” White Paper. The research document, available for download here, adds detail to the reasoning behind SBAM’s efforts to encourage a significant shift in the state of Michigan’s economic development efforts toward “economic gardening.”

 


“We seek to temper the public sector’s traditional role of using tax credits and incentives to lure industry and business from outside the state, and instead suggest a new emphasis on making Michigan welcoming and nurturing for the home-grown, high-growth small businesses that are proven to be the true job-makers,” says SBAM President and CEO Rob Fowler.

 


The White Paper details the elements of a successful economic gardening strategy, including information, infrastructure and environment; lists the services valued by growth-oriented business owners and explains how Michigan’s economy and citizens will benefit from economic gardening.

 


SBAM seeks feedback and reactions to the White Paper. That input will be used to help shape SBAM’s next major initiative in the Propelling a New Economic Direction for Michigan campaign: a ‘blueprint” for Michigan’s future economic direction that will be issued in early October.

 


The White Paper was prepared for SBAM by Public Policy Associates of Lansing with the support of the Edward Lowe Foundation, Michigan Economic Development Corporation and the Small Business Foundation of Michigan.

 

What do you think of the White Paper? Leave a comment below or participate in our forum.

 


Vote in the Aug. 3 Primary Election! See SBAM's endorsements here

The Small Business Association of Michigan’s Small Biz PAC has endorsed candidates for Michigan State House and State Senate races.


In this audio podcast, Michael Rogers talks with Director of Government Relations Mike Batterbee about how the candidates were selected and why they deserve the support of small business voters in the Aug. 3 primary.

 


Questions? Contact Mike Batterbee at (800) 362-5461.

 

What do you think of the SBAM endorsements? Leave a comment below.

 



Automation Alley in Troy to host July 27 discussion of SBAM’s 2010 Entrepreneurship Score Card

Learn more about how Michigan stacks up against our competitor states in supporting and growing entrepreneurs by attending this July 27 program at Automation Alley in Troy. The Small Business Association of Michigan’s President and CEO Rob Fowler, along with Score Card author and entrepreneurship expert Mark Clevey, will discuss the results of the association’s sixth annual Entrepreneurship Score Card.

 



The event will take place from 1:30 p.m. – 3:45 p.m. at Automation Alley, 2675 Bellingham in Troy. There is no charge to attend. Register at Automation Alley's website.

 



In addition to discussing the Entrepreneurship Score Card, Fowler and Clevey will also talk about the Small Business Association of Michigan’s grow-from-within “Economic Gardening” economic development model and the association’s entrepreneurship-focused public policy agenda.

 


RSS
First343344345346347348349350351352Last