Proposed regulations regarding the Small Business Health Care Tax Credit available under the Affordable Care Act were issued on August 23.

Beginning in 2014, the credit will be generally available to small employers that pay at least half the cost of single coverage to employees, purchase health insurance through the Hawaii Health Connector, and have no more than 25 full-time equivalent employees. The credit equals either 50% of the eligible small employer's premium payments made on behalf of its employees under a qualifying arrangement or, where an eligible employer is tax-exempt, equals 35% of the employer's premium payments made on behalf of its employees. The tax credit is subject to a reduction if the employer's number of FTEs exceeds ten or if the average annual wages for FTEs exceed $25,000. The proposed regulations provide that employers will be treated as offering coverage through the Hawaii Health Connector for the entire 2014 taxable year for purpose of eligibility for and calculation of the credit, if (1) as of August 26, 2013, a small employer offers coverage in a plan year that begins on a date other than the first day of its taxable year; (2) the employer offers coverage during the period before the first day of the plan year beginning in 2014 that would have qualified the employer for the credit under the rules otherwise applicable to the period before January 1, 2014; and (3) the employer begins offering coverage through a SHOP exchange as of the first day of its pan year that begins in 2014. See 26 CFR § 1.45R-3(i). Read more.