§ 45R. Employee health insurance expenses of small employers
(a)
General rule
For purposes of section
38, in the case of an eligible small employer, the small employer health insurance credit determined under this section for any taxable year in the credit period is the amount determined under subsection (b).
(b)
Health insurance credit amount
Subject to subsection (c), the amount determined under this subsection with respect to any eligible small employer is equal to 50 percent (35 percent in the case of a tax-exempt eligible small employer) of the lesser of—
(1)
the aggregate amount of nonelective contributions the employer made on behalf of its employees during the taxable year under the arrangement described in subsection (d)(4) for premiums for qualified health plans offered by the employer to its employees through an Exchange, or
(2)
the aggregate amount of nonelective contributions which the employer would have made during the taxable year under the arrangement if each employee taken into account under paragraph (1) had enrolled in a qualified health plan which had a premium equal to the average premium (as determined by the Secretary of Health and Human Services) for the small group market in the rating area in which the employee enrolls for coverage.
(c)
Phaseout of credit amount based on number of employees and average wages
The amount of the credit determined under subsection (b) without regard to this subsection shall be reduced (but not below zero) by the sum of the following amounts:
(d)
Eligible small employer
For purposes of this section—
(1)
In general
The term “eligible small employer” means, with respect to any taxable year, an employer—
(2)
Full-time equivalent employees
(A)
In general
The term “full-time equivalent employees” means a number of employees equal to the number determined by dividing—
(i)
the total number of hours of service for which wages were paid by the employer to employees during the taxable year, by
Such number shall be rounded to the next lowest whole number if not otherwise a whole number.
(B)
Excess hours not counted
If an employee works in excess of 2,080 hours of service during any taxable year, such excess shall not be taken into account under subparagraph (A).
(C)
Hours of service
The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations, rules, and guidance as may be necessary to determine the hours of service of an employee, including rules for the application of this paragraph to employees who are not compensated on an hourly basis.
(3)
Average annual wages
(A)
In general
The average annual wages of an eligible small employer for any taxable year is the amount determined by dividing—
(i)
the aggregate amount of wages which were paid by the employer to employees during the taxable year, by
(ii)
the number of full-time equivalent employees of the employee determined under paragraph (2) for the taxable year.
Such amount shall be rounded to the next lowest multiple of $1,000 if not otherwise such a multiple.
(B)
Dollar amount
For purposes of paragraph (1)(B) and subsection (c)(2)—
(i)
2010, 2011, 2012, and 2013
The dollar amount in effect under this paragraph for taxable years beginning in 2010, 2011, 2012, or 2013 is $25,000.
(ii)
Subsequent years
In the case of a taxable year beginning in a calendar year after 2013, the dollar amount in effect under this paragraph shall be equal to $25,000, multiplied by the cost-of-living adjustment under section
1
(f)(3) for the calendar year, determined by substituting “calendar year 2012” for “calendar year 1992” in subparagraph (B) thereof.
(4)
Contribution arrangement
An arrangement is described in this paragraph if it requires an eligible small employer to make a nonelective contribution on behalf of each employee who enrolls in a qualified health plan offered to employees by the employer through an exchange in an amount equal to a uniform percentage (not less than 50 percent) of the premium cost of the qualified health plan.
(5)
Seasonal worker hours and wages not counted
For purposes of this subsection—
(A)
In general
The number of hours of service worked by, and wages paid to, a seasonal worker of an employer shall not be taken into account in determining the full-time equivalent employees and average annual wages of the employer unless the worker works for the employer on more than 120 days during the taxable year.
(B)
Definition of seasonal worker
The term “seasonal worker” means a worker who performs labor or services on a seasonal basis as defined by the Secretary of Labor, including workers covered by section
500.20(s)(1) of title
29, Code of Federal Regulations and retail workers employed exclusively during holiday seasons.
(e)
Other rules and definitions
For purposes of this section—
(1)
Employee
(2)
Credit period
The term “credit period” means, with respect to any eligible small employer, the 2-consecutive-taxable year period beginning with the 1st taxable year in which the employer (or any predecessor) offers 1 or more qualified health plans to its employees through an Exchange.
(3)
Nonelective contribution
The term “nonelective contribution” means an employer contribution other than an employer contribution pursuant to a salary reduction arrangement.
(5)
Aggregation and other rules made applicable
(A)
Aggregation rules
All employers treated as a single employer under subsection (b), (c), (m), or (o) of section
414 shall be treated as a single employer for purposes of this section.
(B)
Other rules
Rules similar to the rules of subsections (c), (d), and (e) of section
52 shall apply.
(f)
Credit made available to tax-exempt eligible small employers
(1)
In general
In the case of a tax-exempt eligible small employer, there shall be treated as a credit allowable under subpart C (and not allowable under this subpart) the lesser of—
(g)
Application of section for calendar years 2010, 2011, 2012, and 2013
In the case of any taxable year beginning in 2010, 2011, 2012, or 2013, the following modifications to this section shall apply in determining the amount of the credit under subsection (a):
(1)
No credit period required
The credit shall be determined without regard to whether the taxable year is in a credit period and for purposes of applying this section to taxable years beginning after 2013, no credit period shall be treated as beginning with a taxable year beginning before 2014.
(2)
Amount of credit
The amount of the credit determined under subsection (b) shall be determined—
(A)
by substituting “35 percent (25 percent in the case of a tax-exempt eligible small employer)” for “50 percent (35 percent in the case of a tax-exempt eligible small employer)”,
(B)
by reference to an eligible small employer’s nonelective contributions for premiums paid for health insurance coverage (within the meaning of section 9832(b)(1)) of an employee, and
(C)
by substituting for the average premium determined under subsection (b)(2) the amount the Secretary of Health and Human Services determines is the average premium for the small group market in the State in which the employer is offering health insurance coverage (or for such area within the State as is specified by the Secretary).
(h)
Insurance definitions
Any term used in this section which is also used in the Public Health Service Act or subtitle A of title I of the Patient Protection and Affordable Care Act shall have the meaning given such term by such Act or subtitle.
(i)
Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section, including regulations to prevent the avoidance of the 2-year limit on the credit period through the use of successor entities and the avoidance of the limitations under subsection (c) through the use of multiple entities.