Among the many changes brought on by the Health Care Act of 2010, Code Sec. 45R, the Small Employer Health Care Credit (the Credit), was designed to encourage small business employers to provide coverage to their employees. However, businesses have been left with several questions as to the specific requirements for eligibility and filing to claim the Credit.
Eligible Businesses An eligible business is defined as a business that has fewer than 25 “full-time equivalent” (FTE) employees and pays average wages of $50,000 per year or less. An FTE calculation will take into account aggregate hours worked by part-time employees in determining eligibility. Seasonal workers, defined as an employee that works fewer than 120 days out of the year for an employer, are not included in calculating FTEs.
To determine average wages, employers must include all wages, compensation and commissions including overtime, bonuses, vacation and sick leave. Emp
