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Claim New Health Insurance Tax Credit for Small Employers!

November 5, 2010

Qualifying small employers can claim a new tax credit that can potentially cover up to 35% of the cost of providing health insurance coverage to employees. A qualifying small employer is one that:

  • has no more than 25 Full-time Equivalent (FTE) workers
  • pays an average FTE wage of less than $50,000
  • has a qualifying healthcare arrangement in place

A qualifying arrangement is one that requires the employer to:

  • pay at least 50% of the cost of each enrolled employee’s coverage
  • pay the same percentage for all employees

For tax years beginning in 2010, however, a favorable transition rule allows the credit to be claimed when the employer does not pay the same percentage for each enrolled employee, but instead pays for each enrolled employee an amount equal to at least 50% of the cost of single coverage (even if the employee has more-expensive family or self-plus-one coverage).

The allowable credit is quickly reduced under a complicated two-tiered phase-out rule when the employer has more than 10 FTE employees or an average FTE wage in excess of $25,000. This is an example of why it is necessary to contact us at GAI ( as we are able to help you with this new tax break. Call us at 212-979-6830 or stop by for a visit. See you soon!


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