The Patient Protection and Affordable Care Act allows small businesses and tax-exempt organizations to earn a tax credit for providing or maintaining employee health insurance.
Businesses with 10 or fewer full-time equivalent (FTE) employees with an average annual salary of $25,000 or less can earn the maximum credit of 35%, while tax-exempt organizations can receive 25%. The credit is available to small employers that pay at least half the cost of single coverage for their employees, and decreases as the number of qualifying employees and average salary increase, phasing out at 25 full-time equivalent employees with an average salary of $50,000 or more. Family members do not qualify.
In 2014, the maximum credit amount will increase to 50% of the premiums paid for small businesses and 35% for tax-exempt organizations.
For small businesses, the credit can be claimed under the general business credit. Tax-exempt organizations will receive instructions from the IRS for claiming the credit.