Small nonprofits can claim health premium credit now

With the President’s signing of the Patient Protection and Affordable Care Act on March 23, all qualified small employers – both nonprofits and for-profits – can immediately claim a tax credit when they pay for at least half of the health insurance premiums for their employees.

The full credit is available to employers with 10 or fewer workers with average annual wages of $25,000, while firms with up to 25 or fewer employees and average annual wages of up to $50,000 will be eligible for part of the credit.

How it works

The small employer credit will help all small employers (defined as 25 or fewer employees and average wages below $50,000 per year) provide insurance to their employees.

• In Phase I (2010-2013), small nonprofit employers can take a credit in the form of 25 percent of the employer contribution for employee insurance premiums, which they can apply to taxes withheld through payroll. Employees will still get full credit for taxes withheld from their pay.
• In Phase II (2014-onward), the amount of the credit increases to 35 percent.

The law treats for-profits and nonprofits differently in these respects: For-profits get a higher rate for the credit during both phases – 35 percent in Phase I and 50 percent in Phase II – but nonprofits can claim the credit each pay period whereas for-profits must wait until year-end to claim an income tax credit, and then, only if they are profitable. 

For more information visit the National Council of Nonprofits' website.

HMSA expedites expanded family health coverage

Hawaii Medical Service Association will allow adult children up to age 26 to stay on their parent's plan, regardless of whether they are students.

The age extension, being implemented June 1 and beginning Sept. 23, is a provision in the federal health care reform act passed earlier this year, but HMSA is implementing the change early rather than starting in January. HMSA says it recognized young adults could lose health coverage because of age, school graduation or any changes in student status.