The Grant Program 

The Patient Protection and Affordable Care Act (PPACA) creates a grant program to assist small businesses to provide comprehensive workplace wellness programs. Grants will be awarded to eligible employers to provide their employees with access to new workplace wellness initiatives. The grants will be awarded beginning in 2011 with $200 million appropriated for a five-year period. An eligible employer is an employer that:

• Employs fewer than 100 employees who work 25 hours or more per week, and

• Did not have a workplace wellness program as of March 23, 2010 (date of PPACA's enactment).

The PPACA requires the Secretary of Health and Human Services to develop program criteria that are based on research and best practices. A comprehensive workplace wellness program must be made available to all employees and include:

• Health awareness initiatives (including health education, preventive screenings, and health risk assessments)

• Efforts to maximize employee engagement (including mechanisms to encourage employee participation)

• Initiatives to change unhealthy behaviors and lifestyle choices (including counseling, seminars, online programs, and self-help materials)

• Supportive environment efforts (including workplace policies to encourage healthy lifestyles, healthy eating, increased physical activity, and improved mental health)

Employers may submit applications that include a proposal for a program that meets the criteria and requirements as described in the PPACA and developed by the Secretary.

The Proposed Credit

The small business health tax credit included in the Healthcare Reform law provides a 35% tax credit for the employer's healthcare costs. The credit is available from 2010 to 2013 and then a 50% credit is available for two additional years if the employer purchases coverage in the health insurance exchange.

A business with 10 or fewer employees with a per employee compensation level of $25,000 or less is eligible for the full credit. The credit phases out in two ways:

• The number of employees from 11 to 25 and
• Compensation between over $25,000 up to $50,000.

An employer must pay 50% of the cost of the employee's coverage to be eligible for the credit.

Please Refer to Tax Credit Calculator Below. 

Small Business Tax Credit Calculator

Does your business qualify for the healthcare law's new small business tax credit on health insurance? If so, how big is your credit?

Instructions: Fill in variables for rows A, B, C, & D and click "update." B cannot be larger than A.

A: Number of full-time employees in firm

B: Number of employees participating in insurance plan

C: Annual employer premium contribution per participating employee. (Must be at least 50% of total insurance premium

to qualify for credit.)

D: Average annual wage per employee

E: Total employer premium contribution ( = B x C )

F: Tax credit as % of premium contribution (This shrinks as A and D increase.)

G: Total tax credit ( = E x F )[Note: This credit increases by almost 43% in 2014.]

H: Tax credit per participating employee ( = G / B ) $36,000

IRS Small Business Tax Credit Resource

The IRS has updated its website to provide information to help small employers understand the new small business healthcare tax credit and determine whether they are eligible for it. The information is at www.irs.gov and includes: (1) a graphic to help employers quickly determine if they qualify for the credit; (2) scenarios that explain how the credit will affect certain businesses; and (3) A set of frequently asked questions and answers.

For more articles, tools, and guidance on healthcare reform, please see HR.BLR.com's Healthcare Reform: A Resource Center for Employers.

Our HealthCare Reform After 1 Year & Beyond Download Report will help you ensure that your healthcare plan follows the time line (from now to 2018) for total compliance.