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Small Businesses

A healthier workplace is more productive and keeps you ahead of your competition. Providing health insurance for your staff not only improves their quality of life, it also helps retain employees. We know that getting health insurance has not always been easy. Today, it is.

Small businesses that enroll in a group plan offered by the Small Business Health Options Program (SHOP) can take advantage of Federal tax credits worth up to 50 percent of the employer’s share of premium costs.

 What is the Federal Small Business Health Care Tax Credit and who is eligible?

If you are a small business owner, you may qualify for the Federal Small Business Health Care Tax Credit to help pay for the cost of your employees’ health insurance. The tax credit is worth up to 50 percent of your contribution toward employees’ premium costs. This is the amount you pay every month for their health insurance plans. Tax-exempt nonprofits may qualify for a refundable credit worth up to 35 percent of premium costs.

The amount of the tax credit works on a sliding scale based on the number of employees and their average wages. You may qualify for the Federal Small Business Health Care Tax Credit if you have fewer than 25 full-time equivalent employees each making an average of about $50,000 a year or less. Here’s an example of how the tax credit works:

  • Number of full-time employees: 10
  • Wages: $250,000 total or $25,000 per employee
  • Employer contribution to employee premiums: $50,000
  • Tax credit amount: $25,000 (50 percent of employer’s premium contribution)

If you are a small business owner, beginning in January 2014, the Federal Small Business Health Care Tax Credit will only be available if you buy a SHOP Qualified Health Plan. The credit is claimed when you file taxes at the end of the year. Visit the IRS website for more information on how to claim the credit.

You can use the Small Business Tax Credit Calculator to see if your business may qualify for the federal Small Business Health Care Tax Credit to help pay for the cost of your employees’ health insurance or view the Small Business Health Care Tax Credit percentage tables.

How can I purchase insurance eligible for the tax credit for my employees?

If you are a small business owner or nonprofit in Illinois, you must purchase a SHOP Qualified Health Plan in order to qualify for the Federal Small Business Health Care Tax Credit beginning in 2014. Additionally, you must complete a SHOP application and be determined eligible for SHOP in order to receive the tax credit, but you don’t have to complete the application before enrolling in a SHOP plan. Any business or non-profit with 50 or fewer full-time equivalent employees can purchase a SHOP plan even if they do not think they will be eligible for tax credits.

  • Click here to see all SHOP Qualified Health Plans available in your area
  • Click here to access the SHOP Application (Right-click and select “Save Link As.” After you save the file, open it using a PDF program.)

A licensed agent or broker can help you purchase SHOP coverage at no additional cost if they are certified with the SHOP Marketplace. Agents and brokers can recommend specific health insurance plans for your business. You can use the agent and broker search tool to locate federally certified insurance agents and brokers in your area.

To contact one of the insurance carriers offering SHOP Marketplace small group plans, call:

Blue Cross Blue Shield: 1 (800) 203-0585

Land of Lincoln: 1 (888) 858-9130

Health Alliance: 1-800-851-3379 , ext. 8024.

Have questions about the SHOP Marketplace for your business with 50 or fewer employees? Call 1-800-706-7893 Monday through Friday from 8am to 6pm.

What if I do not purchase coverage for my employees?

For 2014, employers of any size are not required to provide health coverage to employees, and employers with fewer than 50 full-time equivalent employees will never be required to offer insurance to their employees.  Employers who choose not to purchase coverage can help their workers find information about new health plans and ways to help make insurance more affordable by directing them to Get Covered Illinois’ page for individual and family coverage.