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When you buy health coverage for your employees through the Small Business Health Options Program (SHOP) Marketplace, you may qualify for a tax credit worth up to 50 percent of your premium contributions.
The new SHOP Tax Credit Estimator can tell you what that credit might be worth to your business. Here are some key things you should know about the tax credit and applying for SHOP:
- Employers with fewer than 25 full-time equivalent employees may be eligible for the Small Business Health Care Tax Credit, worth up to 50 percent of employer premiums contributions, if their employees make an average of $50,000 a year or less.
- The tax credit will be available to eligible employers for two consecutive taxable years.
- The tax credit may be available to eligible tax-exempt employers who could receive up to 35 percent of employer premium contributions, and can access the credit as a refund.
- Generally, the Small Business Health Care Tax Credit is available for eligible employers purchasing SHOP health plans.
- To enroll in a SHOP plan in most states, you’ll use an agent, broker, or insurance company. You’ll also need to complete a SHOP eligibility application.
- Visit IRS.gov for the most up-to-date information and guidance on claiming this tax credit.
- Even if you’re a small employer who does not qualify for a small business tax credit, you may still purchase coverage through SHOP.
SHOP is open to employers with 50 or fewer full-time-equivalent employees (FTEs) and enrollment is open year- round.
A new SHOP Full-Time Equivalent Calculator can help you find out if your business meets the definition of a small business for SHOP based on the number of employees. If your state runs its own SHOP, visit your state Marketplace for information on how to calculate FTEs.