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THE SHOP MARKETPLACE
FOR EMPLOYERS WITH 50 OR FEWER FULL-TIME-EQUIVALENT EMPLOYEES (FTE’S)
To participate in the Small Business Health Options Program (SHOP) Marketplace, you must:
 Have at least 70% of your full-time employees must enroll in your SHOP plan
 (Employers who apply for SHOP coverage between November 15 and December 15 each year can enroll
without meeting this requirement.)
 Have a principal business address within the state where you’re buying coverage, or have an eligible employee with a primary worksite within the state where you’re buying coverage
 Have at least one common-law employee on payroll (not including a business owner or sole proprietor or
their spouses on the payroll)
 Employ 50 or fewer full-time equivalent employees (FTEs), including part-time employees
 Based upon a 40 hour work week
 Part-time example: 2 half-time employees generally equal 1 full-time equivalent employee
 Beginning no later than January 1, 2016, SHOP will be available for employers with 100 or fewer FTEs
 To calculate full-time equivalent employees when you apply for SHOP:
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Use the most recent year
Exclude seasonal employees (those working fewer than 120 days a year) from all calculations
Count the number of people who worked an average of 30 or more hours a week
Add to this amount the number of hours worked per week by non-full time employees divided by 30
Example: Mike owns a business with 20 employees. He has
- 15 employees working an average of 40 hours per week
- 2 employees working an average of 15 hours per week
- 1 employee working an average of 25 hours per week
- 2 employees working an average of 27 hours per week
Source: marketplace.cms.gov/c2c
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THE SHOP MARKETPLACE
USE AN AGENT/BROKER IN THE SHOP MARKETPLACE
 a licensed agent or broker is needed to provide help and handle your SHOP business.
 You won’t pay more if you use a SHOP agent or broker. You pay the same, with or without a broker. The
premiums you pay will be the same with or without the help of agents or brokers. Agents and brokers are
usually paid by the insurance companies whose policies they sell.
 A licensed agent or broker can help you:
 apply for insurance for your employees
 review and compare price, coverage, quality, and other important features
 choose a plan that works for your budget, business, and employees
Source: marketplace.cms.gov/c2c
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SMALL BUSINESS HEALTH CARE TAX CREDIT
SMALL BUSINESS HEALTH CARE TAX CREDIT
 If you have fewer than 25 full time equivalent employees (FTE) making average annual wages of
$50,000 a year or less, you may qualify for tax credits if you buy insurance through SHOP
For tax years 2010 through 2013, the maximum credit is 35 percent of premiums paid for small business employers and 25 percent of premiums paid for small tax-exempt employers such as charities
For tax years beginning in 2014 or later, there are changes to the credit:
 The maximum credit increases to 50 percent of premiums paid for small business employers and
35 percent of premiums paid for small tax-exempt employers
 2014: a small employer must be enrolled in a SHOP plan
 2015: the shop plan must be enrolled and billed through the on-line Marketplace beginning with the plan year on/after 01/01/15
 The credit is available to eligible employers for two consecutive taxable years
 To qualify for the Small Business Health Care Tax Credit, you must pay at least 50% of full-time employees' premium costs. You don’t need to offer coverage to part-time employees or to dependents
 The tax credit is highest for companies with fewer than 10 employees who are paid an average of
$25,000 or less. The smaller the business, the bigger the credit
 What is an FTE?
 Basically, two half-time employees count as one FTE. That means 20 half-time employees are equivalent to 10 FTEs, which makes the number of FTEs 10, not 20. Seasonal employees are excluded
 What are average annual wages?
 If you pay total wages of $200,000 and have 10 FTEs. To figure average annual wages you divide
$200,000 by 10 — the number of FTEs — and the result is your average annual wage. The average annual wage would be $20,000
 The amount of the credit you receive works on a sliding scale. The smaller the business or charity, the
bigger the credit. So if you have more than 10 FTEs or if the average wage is more than $25,000 (as
adjusted for inflation beginning in 2014), the amount of the credit you receive will be less
Source: marketplace.cms.gov/c2c
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SMALL BUSINESS HEALTH CARE TAX CREDIT
 Who are excluded employees? The following individuals are not considered employees when you
figure this credit. Hours and wages of these employees and premiums paid for them are not counted
when you figure your credit.
 The owner of a sole proprietorship, partner in a partnership, shareholder who owns (after applying the
section 318 constructive ownership rules) more than 2% of an S corporation, shareholder who owns
(after applying the section 318 constructive ownership rules) more than 5% of the outstanding stock or
stock possessing more than 5% of the total combined voting power of all stock of a corporation that is
not an S corporation, a person who owns more than 5% of the capital or profits interest in any other
business that is not a corporation, family members or a member of the household who is not a family
member but qualifies as a dependent on the individual income tax return of a person listed above, Family members include a child (or descendant of a child), a sibling or step-sibling, a parent (or ancestor of
a parent), a step-parent, a niece or nephew, an aunt or uncle, or a son-in-law, daughter-in-law, father-in
-law, mother-in-law, brother-in-law, or sister-in-law, a spouse is also considered a family member for
this purpose.
EXAMPLE OF HOW THE TAX CREDIT WORKS
 Employer who qualifies for the 2014 maximum credit of 50% of their premium contribution:
Number of employees: 10
Wages: $250,000 total or $25,000 per employee
Employer contribution to employee premiums: $70,000
Tax credit amount: $35,000 (50% of employer's contribution)
HOW DO YOU CLAIM THE CREDIT?
 You must use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. For detailed information on filling out this form, see the Instructions for Form 8941.
 If you are a small business, include the amount as part of the general business credit on your income
tax return.
 If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. You must file the Form 990-T in order to claim the credit, even if
you don't ordinarily do so.
Source: marketplace.cms.gov/c2c