Tax Credits Through SHOP: How They Work, and How your Broker Can Help

If you are like many small businesses, you may have questions about the Small Business Health Options Program (SHOP) – and you may be specifically wondering if you will qualify for tax credits through SHOP. This is a tax credit that is only available if you purchase your small group health insurance through the SHOP marketplace.

If you are a business that employs fewer than 25 full-time equivalent workers who earn a yearly average of less than $50,000, your business may qualify for employer health care tax credits. While you don’t need to offer insurance coverage to your part-time employees or their dependents, you do need to be paying at least 50% toward your full-time employees’ premiums in order to qualify for the Small Business Health Care Tax Credit.

The tax credit offers higher benefits for smaller businesses – those with less than 10 employees being paid $25,000 or less on average — the smaller your business, the larger the credit. For example, for a business with 10 employees and $250,000 in wages, with an employer contribution of $70,000 toward employee premiums, the tax credit would amount to $35,000, or 50% of the employer contribution. Your tax advisor can help you determine your specific tax credit.

For more information about the benefits of buying small group health insurance through a broker, or to find out if you qualify for the small business health care tax credit, contact Sackett & Associates Insurance Services.