The massive and controversial “Patient Protection and Affordable Care Act,” and the “Health Care and Education Reconciliation Act of 2010” contain so much information that I can’t begin to explain all the ramifications in my blog.  You should work closely with a knowledgeable financial advisor to make sure you get all the benefits from these two Acts while avoiding all the pitfalls.

The Small Business Health Tax Credit (2010)
     For the year of 2010, your business qualifies for a 35 percent tax credit of the premium costs incurred if your business has:

     • no more than 25 employees
     • employees whose annual wages average no more than $50,000, and
     • contributed at least half of the total premium cost

     If, however, your business has 10 or fewer employees and their average annual wages are less than $25,000 your business qualifies for the full credit.
     Self-employed business owners – this includes sole proprietors, partners, 2 percent shareholders of an S corporation, and 5 percent principals in a professional practice are NOT treated as employees for purposes of the Small Employer Health Insurance Credit.

                      Beware: there is a special rule that prevents sole proprietors 
                      from receiving the credit for themselves or family members!

     Self-employed business owners can deduct the cost of health insurance for themselves, their spouses, and dependents. But, remember, there is a difference between a deduction and a tax credit.
     Many of the changes in the new law will take at least two years to go into effect.  The IRS will be hiring 16,500 auditors to administer compliance and assessing fees, taxes, and penalties. They will be looking at your business.  Make sure your business has done everything to maximize the benefits and to avoid the pitfalls of the “Patient Protection and Affordable Care Act,” and the “Health Care and Education Reconciliation Act of 2010” by working with a knowledgeable and qualified financial advisor.