Wiggle Room for Small Group Tax Credit Users

Does being a small business give you extra wiggle room? If you are a user of the small employer health insurance tax credit, you could get some extra wiggle room for upcoming healthcare reform deadlines. Some users will be able to take advantage of extra time to start buying coverage through the exchanges.

A new draft regulation from the IRS (Internal Revenue Service) attempts to provide employer tax credit users with a bit more flexibility. If you are an employer with 25 or less “full time” (and modestly paid) employees, you could benefit from the draft regulation.

The Basics:

1. The Patient Protection and Affordable Care Act created a health insurance subsidy for employers through the addition of a tax credit provision (Section 45R) to the Internal Revenue Code.

2. When the PPACA Small Business Health Options Program exchanges open, employers falling into this category can use the SHOP plan to qualify for the tax credit.

3. If you are an employer that meets the basic qualifications, but your plan years and taxable year start on different dates, it may not be possible to take advantage of the “SHOP” exchange at the start of the first taxable year starting in 2014.

4. The transition rules would help employers in this situation by enabling them to wait until the first day of its first plan year in 2014 to begin offering SHOP coverage (instead of the first taxable year).

5. In this case, the IRS would treat the employer as if they had offered SHOP coverage for the entire taxable year (2014).

Sometimes the little guys do get a little bit of a head start. Don’t ignore the chance to maximize your company’s options during these times of change.

If you have questions on eligibility requirements, how upcoming healthcare reform changes will affect you and your company’s benefits, etc. please get in touch today. DeWitt Risk Management Consultants can provide you with expert answers at 480-969-0202.

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