Many people we talk to seem confused about the health tax credits and 
subsidies. This article provides a general high-level view to identify how each tax credits and grants differ from the tax credit for small enterprises (SHOP).
Tax credits
a tax credit is generally a tax subtraction you need otherwise. Business owners need to know about both the health tax credits: the tax credit for individuals and the tax credit for small businesses
Individual Tax Credit
If a person is eligible and applies. Exchange by their condition (eg healthcare.gov), they can apply for a tax credit of individual premiums. This includes self-people are treated as individuals, not as small businesses. Individuals are eligible if:
- The household earns between 138% and 400% of the federal poverty level (FPL). For reference, 400% of the FPL is $ 47,080 for an individual in 2015 and $ 97,000 for a family of four. See the 2015 FPL graphics.
- The individual is not eligible for employer health plan or government.
The individual premium caps the cost of health insurance on a sliding scale between 2 -. 9.5% of household income by income
the individual premium tax credit is advanced to pay, which means that the discount is applied at the time of purchase. You do not have to wait to file your tax return to receive the credit.
Find more details on the individual tax credit.
tax credit for small businesses
In 2016, the tax credit for small businesses is worth up to 50% the employer's contribution to employee premium costs (up to 35% for tax-exempt employers) and is applied to the company, not employees . The tax credit is higher for small businesses with fewer than 10 employees who are paid an average of $ 25,000 or less. The larger the company, the greater the credit
To be eligible for the tax credit for small health care business, you must :.
- Being an employer of fewer than 25 full-time equivalents (FTE), and
- Paying an average salary of less than $ 50,000 per year per employee, and
- Pay at least half (50%) of employee health insurance premiums (for full-time employees only), and
- purchase a group health insurance plan by Store through your state of the market.
government subsidies
a government grant is generally receive government benefits a person. Usually, a government grant is tax free (not included in taxable income).
Regarding health care, the government offers to share special subsidy costs (in addition to tax credits for individual premium). Government subsidies help those who qualify pay for their deductibles, co-payments, medical expenses co-insurance and out-of-pocket. The cost-sharing grants are available for people whose family income is between 100% and 250% of the FPL.
If you are a small business owner, what questions do you have about health care deductions, tax credits and grants? Leave a comment and we'll help you answer.
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