Recently, one of our Health Care Reform Specialists was asked to discuss how employers with fiscal year plans will calculate their small employer health insurance credit in 2014.
On August 26, 2013, proposed regulations were released detailing how to determine if a small business is eligible for the credit and how to properly calculate and make a claim as well a transition rule for plans that have a starting year that differs from the employer’s taxable year These regulations state that coverage must be:
- As of August 26, 2013, is offered beginning on a date other than the first of the taxable year
- Offered before the beginning of the 2014 plan year that would have qualified for credit under the previous rules (before January 1, 2014) and
- Offered through a SHOP exchange at the beginning of the 2014 plan year which will be treated as being offered for the entire 2014 taxable year for credit purposes.
If these criteria are met, the regulations state that the credit is to be calculated at the 50 percent rate, or 35 percent for small employers who are tax-exempt. This will cover the entire 2014 taxable year, which will be the beginning of the two consecutive taxable year credit period. Read IRS Notice 2014-6 Section 45R or contact our Health Care Reform team for additional information.