8788 / What credit is available for small employers who contribute to employee health insurance costs?
Eligible small employers may take advantage of a tax credit for employee health insurance expenses for taxable years beginning after December 31, 2009, provided the employer offers health insurance to its employees and makes a non-elective contribution on behalf of each employee who participates in the plan.1
An eligible small employer is defined as an employer that has no more than 25 full time employees, the average annual wages of whom do not exceed $61,400 (in 2023, $57,400 for 2022, $55,600 for 2021 and $55,200 for 2020).2
In order to qualify, the employer must have a contribution arrangement for each employee who enrolls in the health plan offered by the employer through an exchange that requires that the employer make a non-elective contribution in an amount equal to a uniform percentage, not less than 50 percent, of the premium cost.3