Question: It is my understanding that small employers with under 25 employees who are low wage, may qualify for a 50% subsidy in 2014 in Covered CA. If this is correct, will the 50% subsidy continue in 2015 and out, or be phased out?
Answer: Yes. There is a tax credit of up to 50% percent of the employer’s eligible premium expenses for tax years 2014 and 2015. Beginning in 2014 coverage must be purchased from Covered California to qualify for a tax credit. The Small Business Tax Credit has been available since 2010, with a sliding-scale tax credit of up to 35 percent of the employer’s eligible premium expenses for tax years 2010-2013.
Employers that provide health care coverage to their employees are eligible for the Small Business Health Care Tax Credit if:
- They employ fewer than 25 full-time employees.
- Annual average earnings wage per employee is less than $50,000 per year.
- They pay at least 50 percent of employees’ premium cost for health insurance coverage.