Tax Credit For Dependent Health Benefits Paid Worksheet Instructions

2005

TAX CREDIT FOR DEPENDENT HEALTH BENEFITS PAID

WORKSHEET INSTRUCTIONS

This credit is available to employers that offer a qualified health benefit plan and that employ fewer than five

employees.This credit is equal to the lesser of 20% of the dependent health benefits paid by the employer or $125

per employee with dependent health coverage. A taxpayer that employs five or more employees after qualifying for

the credit may continue to qualify for the credit for another two years. Otherwise, a taxpayer may claim a credit only

for those periods during which the employer: 1) offers a qualified health benefit plan that is made available to all of its

low- income employees, 2) pays at least 80% of the health insurance costs for each low-income employee under the

plan; and 3) pays at least 60% of the cost of dependent health insurance benefits for children under 19 who are

dependents of low-income employees under the plan. The credit is limited to 50% of the income tax due. Any

unused credit may be carried forward for two years.

“Employer” means entity that employs one or more individuals performing services for it within this State. For a

complete definition of “employer,” see 26 M.R.S.A. § 1043.

“Dependent” means a dependent, as defined by IRC §152, who is under 19 years of age.

“Dependent health benefits” means health benefits and health insurance costs allowable as deductions to the employer

under IRC § 105, paid by the taxpayer on behalf of the taxpayer’s low-income employees

for the benefit of the employees’ dependents.

“Health benefit plan” means a plan that includes comprehensive coverage for at least the following range of

benefits: inpatient and outpatient hospital services; physicians’ surgical and medical services;

laboratory and x-ray services; and well-baby and well-child care, including age-appropriate

immunizations. The plan must provide coverage that has an actuarial value no less than

80% of the actuarial value of coverage that is provided to employees of the State. For

purposes of this paragraph, “actuarial value” means the expected cost of a benefit based on

assumptions as to relevant variables such as morbidity, mortality, persistency and interest.

When comparing the actuarial value of one benefit or package of benefits to another, both

actuarial values must be based on the same assumptions. The plan must also impose

copayment and deductible costs on the employee that do not exceed 10% of the actuarial

value of all benefits afforded by the plan and makes the same or comparable coverage

available for the benefit of the employee’s dependent children who are under 19 years of

age.

“Low-income employee” means a Maine resident whose average weekly earnings from the employer do not

exceed the State’s average weekly wage as calculated by the Department of Labor.

SPECIFIC LINE INSTRUCTIONS

Please enter the employer name and social security number (“SSN”) or employer identification number (“EIN”).

Note: In the case of pass-through entities (partnerships, LLCs, S corporations, trusts, etc.), the partners, members,

shareholders, beneficiaries, etc., are allowed a credit in proportion to their respective interest in these entities. Attach

a schedule showing the credit generated by the pass-through entity and the assignment/distribution to each partner,

shareholder, beneficiary, etc. Include the name, address, and federal ID number of the pass-through entity on the schedule

and the name and SSN/EIN of each partner, shareholder, beneficiary, etc.

Line 1.

Enter any unused tax credit amounts from previous years. Unused credits may be carried forward for

up to two years.

Line 2.

Enter the total amount paid by the employer to provide dependent health benefits in 2005. See defini-

tion of “dependent health benefits” above.

Line 4.

Enter the total number of employees with dependent health benefits provided by the employer.

Lines 8 & 9. The credit is limited to 50% of the Maine tax liability.

Line 11.

Enter the unused credit amount here. That portion of the unused credit not exceeding the 2-year

carryover period may be claimed on your Maine income tax return next year. This amount may be

increased by any amount on line 10 not utilized on Form 1120ME, Schedule C or Form 1040ME, Sched-

ule A due to the use of other credits first.

Rev. 11.15.05

Tax Credit For Dependent Health Benefits Paid Worksheet Instructions - 2005

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