IRS Releases Average Premiums for Determining Small Business Health Care Credit under the New Health Care Law

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Via the Journal of Accountancy

On Monday, the IRS issued average small group market premiums for use in determining the new small business health care credit under IRC Section 45R, as enacted by the Patient Protection and Affordable Care Act.

Beginning in 2010, the act provides tax credits for small businesses (businesses with 25 or fewer employees and wages less than $50,000) of up to 35% of non-elective contributions the businesses make on behalf of their employees for insurance premiums.  The amount of the credit is based on a percentage of the lesser of: (1) the amount of non-elective contributions paid by the eligible small employer on behalf of employees under the arrangement during the tax year, and (2) the amount of non-elective contributions the employer would have paid under the arrangement if each such employee were enrolled in a plan that had a premium equal to the average premium for the small group market in the employer’s state. 

Revenue Ruling 2010-13, provides the information necessary to determine the average premium under number (2) above, and can be found here.

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