IRS Allows Small Business Tax Credit for Non-Marketplace Plans

IRS Allows Small Business Tax Credit for Non-Marketplace Plans

The IRS recently released Notice 2018-17 that permits small employers to claim the small business tax credit for non-marketplace coverage if there are no options available on the small business health options (SHOP) marketplace. The notice applies for 2017 and beyond and verifies that the employer's plan must meet the requirements for the tax credit in place prior to 2014. Business Benefits has been advocating for this change for several years.

The tax credit was included as part of the ACA to encourage small employers to provide health insurance to their employees. Unfortunately, many employers have been unable to claim the credit due to the current eligibility limitations. Currently, credits are available to eligible small employers of up to 25 full-time equivalent employees (FTEs) that pay an average annual wage of less than $50,000. Full credits are available to eligible small employers of up to 10 FTEs with an average annual wage of $25,000 or less.