The new Health Care Reform has created a bit of confusion for many contractors.  When working on prevailing wage and Davis-Bacon jobs, health insurance is usually the least of your worries.  All of the paperwork and regulations that have to be followed while on these jobs is enough to think about.  Keeping current on the minutiae of health care policy can sometimes feel like it’s just too much – which is why we wanted to let you know that one of the changes contained in the Health Care Reform Act might be a real help to small businesses and contractors.

The New Small Business Tax Credit

The small business tax credit is available to small businesses to help offset the cost of health care coverage for your employees, which includes bona fide employer sponsored prevailing wage medical plans.  The maximum credit that an employer can receive is 35% of the company’s contribution and depends, among other things, on whether the company is for profit or tax exempt.  To qualify, your company must:

  1. Provide at least 50% of the cost of health care coverage for your employees
  2. Have fewer than the equivalent of 25 full-time employees, excluding owners and their family members.  For example, if a company has fewer than 50 part-time employees, they would be eligible.  2 part-time employees count as 1 full-time employee.
  3. Pay annual wages that average less than $50,000 per full-time equivalent employee

To find out more, and to see if your company qualifies for this small business tax credit, contact your own attorney or tax professional.