Using this tool

Before you start, you'll need:
Payroll information

Number of employees (seasonal, part-time, full-time, etc.)
Total hours worked by all employees
Total annual FICA wages paid during the tax year

Health plan information

Total amount paid for health insurance for employees during the tax year
Total annual premium for the most expensive coverage for each tier (single, family, etc.)
Number of plan participants by tier (single, family, etc.)

Watch a tutorial
How does the tax calculator work? View tutorial now.

Are you grandfathered?

See if your health plan is grandfathered

Remember hearing, "If you like the plan you have, you can keep it"? Find out what it means to have a grandfathered health plan.

» Find out now.

Small business
tax credit calculator

An estimated 4 million small businesses (including nonprofits) will qualify for tax credits to help cover the cost of providing health benefits for their employees.

Does your business qualify? How much can you save?

This tool will walk Michigan employers through the process of applying for the tax credit. (Calculations will only be valid for Michigan employers.)

Minimum employer premium contribution

Yes No

Do you contribute at least 50% of the insurance premium for all employees enrolled in your plan?

Count only the portion you pay, not your employees
If you pay at least 50% of employee-only (single) premium for any of these plan types, select "yes":
- Medical care
- Dental
- Vision
- Other

Minimum employer premium contribution:

You do not qualify for the tax credit.

Number of full-time equivalents

Enter the total hours of service per year for employees.

For the purposes of performing these calculations, the following employees are excluded:

Seasonal workers unless they work more than 120 days during the taxable year
Self-employed (sole proprietor, partner, LLC member if LLC is taxed as a partnership)
A 2% or more shareholder of an S-corporation
A 5% owner of the business
Family or household member of any of the above

How should you calculate the number of service hours?

Number of full-time equivalents:

You don't qualify for the tax credit. You have 25 or more FTEs for this tax year.

Average annual wage of employees

Enter the total annual wages paid during the tax year.

Use FICA wages without the FICA dollar limitation.

Average annual employee wages:

You do not qualify for the tax credit. Your average wage is more than $50,000.

Total employer-paid premium

Enter the total amount you paid for health insurance for your employees during the tax year.

Include amounts paid for all seasonal employees.

Do not include amounts paid to cover:

Self-employed (sole proprietor, partner, LLC member if LLC is taxed as a partnership)
A 2% or more shareholder of an S-corporation
A 5% owner of the business
Family or household member of any of the above

Do not include premium you paid for plans pursuant to a salary reduction arrangement under a Section 125 cafeteria plan.

Include premium you paid for plans where your contribution was at least 50% of the single (employee-only) premium amount.

More details

Total employer-paid health insurance:

Total eligible employer-paid premium

Yes No

Single coverage (employee-only)
Is the highest 2010 annual single premium less than $5,098?

Yes No

Family coverage (employee and at least one other person)
Is the highest 2010 annual family premium less than $12,364?

Employees with Single Coverage

How many of your employees have single coverage?

What percentage of their premium do you pay?

Employees with Family Coverage

How may of your employees have family coverage?

What percentage of their premium do you pay?

Total eligible employer-paid health insurance:

Full tax credit amount (before reductions)

Yes No

Are you a tax-exempt organization?

Full tax credit amount (before reductions):

Small business tax credit amount

Required rate reduction

Why is the credit reduced?

The credit is a refundable credit limited to the amount of income tax and Medicare (i.e., Hospital Insurance) tax that the employer is required to withhold from the employees' wages for the year plus the employer share of Medicare tax on employees' wages. The IRS will provide further information on how a tax-exempt employer can claim the tax credit.

Consult your tax adviser to determine exactly how the credit will work for your business or organization.

Small business tax credit amount:

You do not qualify for the tax credit.

Understanding Health Reform

Using this tool

Are you grandfathered?

Small business tax credit calculator

Minimum employer premium contribution

Number of full-time equivalents

Average annual wage of employees

Total employer-paid premium

Total eligible employer-paid premium

Employees with Single Coverage

Employees with Family Coverage

Full tax credit amount (before reductions)

Small business tax credit amount

Understanding
Health Reform

Small business
tax credit calculator