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IRS Releases 2018 Form 8941 for Claiming Small Business Health Care Tax Credit

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Form 8941 (Credit for Small Employer Health Insurance Premiums) and Instructions (2018)

Form 8941

Instructions

The IRS has released the 2018 Form 8941, to be used by eligible small employers to calculate their health care tax credit. The small business health care tax credit generally is available to employers that have fewer than 25 employees, pay average annual wages of less than $50,000 (indexed), and contribute a uniform percentage of at least 50% of the premium costs for employee health insurance coverage obtained through a Small Business Health Options Program (SHOP) Exchange (unless an exception applies). The maximum tax credit is generally 50% of employer-paid premiums (35% for tax-exempt eligible small employers) and can be taken for only two tax years, which must be consecutive (see our Checkpoint article).

The 2018 instructions identify the information needed to calculate the tax credit, and include worksheets to determine the number of employees, average wages, and average small market premium for each state where the employer has employees. (The credit may be reduced if the employer pays premiums greater than the average for the state. Average premiums for all states by county are provided in a table, updated for 2018.) The instructions note the transition relief provided in IRS Notice 2018-27, which allows eligible small employers with a principal business address in certain counties where no SHOP Exchange coverage was available to claim the credit for 2018 if they properly claimed the credit under Code § 45R for all or part of 2017 (see our Checkpoint article). Once calculated, the tax credit is claimed as a general business credit on Form 3800 (or, by tax-exempt small employers, as a refundable credit on Form 990-T).

EBIA Comment: In previous years, the instructions have specified the counties with transition relief; however, for 2018 and beyond, employers are instructed to go to Healthcare.gov/small-business, select “Plans and Prices,” and enter a zip code to see whether a particular county has coverage available through a SHOP Exchange. The credit continues to be available to qualifying employers utilizing the SHOP Exchange direct enrollment process (see our Checkpoint article). For more information, see EBIA’s Health Care Reform manual at Sections XXI.D (“Small Business Health Options Program (SHOP)”) and XXVI (“Small Business Health Care Tax Credit”).

Contributing Editors: EBIA Staff.

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