Tax Credits

Businesses with fewer than 25 employees and average wages below $50,000/year are eligible for tax credits if they provide health insurance coverage and contribute at least 50% of the employee’s premium.

In order to qualify for the tax credit employers must:

  • Have fewer than 25 employees
  • Cover at least 50% of the cost of employee coverage (not including family coverage)
  • Have employees with average wages less than $50,000/year
  • Enroll for health insurance through Nevada Health Link’s (HealthCare.gov) SHOP

The amount of the credit can equal up to 50% of the premium the employer pays.  The employer may also deduct the allowable portion of the contributed premium as a business expense. Please consult your tax preparer for more details.

Tax Penalties

There will be no tax penalty for businesses with less than 50 full-time equivalent employees (FTEs).

Employers who have 50 or more FTEs are required to provide health insurance coverage for their employees in 2015. The coverage must be affordable (cost no more than 9.5% of an employee’s annual income) and meet the minimum essential coverage (MEC) requirements.

Companies that do not comply will be subject to the following fines by the IRS:

  • No coverage offered: $2,000 x (FTEs – 30) per year
  • Coverage offered but is not affordable or does not meet the MEC requirements: Lesser of the above equation or $3,000 x FTEs that receive an Advanced Premium Tax Credit (APTC)

For example, if an employer has 51 employees and does not offer coverage that meets the requirements, the employer will have to pay a penalty of $42,000 ($2,000 x 21 = $42,000).