Small Businesses Eligible for Health Insurance Tax Credit Starting in 2007

Beginning January 1, 2007, certain small employers will be eligible for a tax credit to offset the costs of their health benefit costs.  In order to claim the tax credit, small businesses (defined as having 25 eligible employees or less and offering health benefits to all eligible workers) must meet specific criteria.  The following is a breakdown of those requirements:

• The business must pay at least 50% of the premiums for healthcare coverage.
  
• The healthcare coverage must be at least equal to the basic healthcare plan (SGR) coverage recommended by the Small Employer Carrier Committee or the eligible employees have qualifying existing coverage.
  
• The tax credit is equal to a dollar amount per eligible employee whose total annual earnings do not exceed $40,000.
  
• The dollar amount of the tax credit is $250.00, as long as it does not exceed the taxpayer’s costs of providing health benefits for the employee during the taxable year.
  
• A sunset clause in the legislation states that this law will expire January 1, 2009.
  

To For a copy of the legislation, click here.  If you have any questions about these rules, please contact our office at 919-403-1986.

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September 22, 2006

Hill, Chesson & Woody Employee Benefit Services

194 Finley Golf Course Rd, Suite 200,
Chapel Hill, NC 27517
Phone: 919.403.1986
Fax: 919.913.0237

www.hcwbenefits.com