Small Business Health Care Tax Credit Questions and Answers: Transition Relief for Tax Years Beginning in 2010
Q. Is relief available to make it easier for small employers to meet the requirements for a qualifying arrangement?
A. Yes. In Notice 2010-44, the IRS and Treasury issued guidance providing that, for tax years beginning in 2010, certain transition relief applies. Specifically, an employer will be deemed to satisfy the uniformity requirement if it pays at least 50 percent of the premium for single coverage for each enrolled employee, even if it does not pay the same percentage of the premium for each employee. For example, if the employer offers more expensive coverage (such as family), the employer will have satisfied the uniformity requirement if it pays at least 50 percent of the premium for single coverage for that employee (even if it is less than 50 percent of the family coverage).
Also, Notice 2010-82 further clarifies ways for a small employer to meet the requirements for a qualifying arrangement. For tax years beginning in 2010, an employer can use the transition rule above or the rules in Notice 2010-82.
Q. Can employers who do not satisfy the 2010 transition rule still meet the qualifying arrangement requirement for the tax year beginning in 2010?
A. Yes. Certain employers who do not satisfy the 2010 transition rule (because they contribute less than 50 percent of the employee-only premium for some enrolled employees) may still qualify for the credit for the tax year beginning in 2010 under other rules for qualifying arrangements set forth in Notice 2010-82. Employers who may be able to take advantage of these rules include, for example, employers who offer more than one type of health insurance coverage or whose insurance provider does not charge the same premium for all employees enrolled in single (employee-only) coverage. For details on these additional rules, see Notice 2010-82.
- Who Gets the Tax Credit
- Calculating the Credit
- Determining FTEs and Average Annual Wages
- How to Claim the Credit