The new health reform law gives a tax credit to certain small employers (including farm business owners with employees) that provide health care coverage to their employees, effective with tax years beginning in 2010.
Small employers that provide health care coverage to their employees and that meet certain requirements (“qualified employers”) generally are eligible for a federal income tax credit for health insurance premiums they pay for certain employees. In order to be a qualified employer, (1) the employer must have fewer than 25 full-time equivalent employees (“FTEs”) for the tax year, (2) the average annual wages of its employees for the year must be less than $50,000 per FTE, and (3) the employer must pay the premiums under a “qualifying arrangement”.
The IRS has an informative website that answers the many different questions about this new provision of the Patient Protection and Affordable Care Act which was passed by Congress and was signed by President Obama on March 23, 2010.
The following webpage contains questions and answers that provide information on the credit as it applies for 2010-2013, including information on transition relief for 2010.