The federal small business health care tax credit is generally available to employers with...
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The small business health care tax credit rewards small employers that contribute to employee coverage. To qualify, an employer generally must have 25 or fewer full-time-equivalent employees, pay at least half of the premium, and — in California — purchase coverage through Covered California for Small Business (the SHOP exchange) so that the credit can be claimed. The credit is scaled to average wages and phases out as size and wages rise. This eligibility structure is tested in the small group market section of the A&H outline, where the exchange channel is part of the California delivery system.
Why the other options are wrong
- B) The credit targets small employers, not groups above 50 employees.
- C) The credit is tied to employer-sponsored group coverage purchased through the small business exchange, not individual policies.
- D) Large groups of 100 or more do not qualify for the small employer tax credit.
Memory hook
Twenty-five or fewer FTE employees buying through CCSB unlocks the small business credit.