Department of the Treasury
Internal Revenue Service
Instructions for Form 8941
Credit for Small Employer Health Insurance Premiums
Section references are to the Internal Revenue Code
Partnerships, S corporations, cooperatives,
unless otherwise noted.
estates, trusts, and tax-exempt eligible small
employers must file this form to claim the credit.
All other taxpayers must not complete or file this form if
their only source for this credit is a partnership, S
For the latest information about developments related to
corporation, cooperative, estate, or trust. Instead, they
Form 8941 and its instructions, such as legislation
must report this credit directly on line 4h in Part III of Form
enacted after they were published, go to
3800, General Business Credit.
Eligible Small Employers
Employers in Hawaii cannot claim this credit for insurance
You are an eligible small employer for the tax year if you
premiums paid for health plan years beginning after 2016.
meet the following three requirements.
For more information, see
Waiver for Hawaii
in the Line A
1. You paid premiums for employee health insurance
coverage under a qualifying arrangement. A
qualifying arrangement is generally an arrangement that
requires you to pay a uniform percentage (not less than
Purpose of Form
50%) of the premium cost for each enrolled employee's
health insurance coverage (defined later). However, an
Eligible small employers (defined below) use Form 8941
arrangement that requires you to pay a uniform premium
to figure the credit for small employer health insurance
for each enrolled employee (composite billing) and offers
premiums for tax years beginning after 2009. For tax
different tiers of coverage (for example, employee-only,
years beginning after 2013, the credit is only available for
dependent, and family coverage) can be a qualifying
a 2-consecutive-tax-year credit period. The maximum
arrangement even if it requires you to pay a uniform
credit is generally a percentage of premiums the employer
percentage that is less than 50% of the premium cost for
paid during the tax year for certain health insurance
employees not enrolled in employee-only coverage.
coverage the employer provided to certain employees
In addition, an arrangement that requires you to pay a
enrolled in a qualified health plan offered through a Small
separate premium for each employee based on age or
Business Health Options Program (SHOP) Marketplace.
other factors (list billing) can be a qualifying arrangement
But the credit may be reduced by limitations based on the
even if it requires you to pay a uniform percentage that is
employer's full-time equivalent employees, average
less than 50% of the premium cost for some employees.
annual wages, adjusted average premiums, and state
For details, see Employer Premiums Paid, Health
premium subsidies and tax credits.
Insurance Coverage, and Qualifying Arrangement, later.
For information about insurance plans offered
2. You had fewer than 25 full-time equivalent employ-
through a SHOP Marketplace, visit
ees (FTEs) for the tax year. You may be able to meet
this requirement even if you had 25 or more employees.
For details, see Worksheets 1 and 2.
For tax-exempt eligible small employers, the
maximum credit is 35% of premiums paid, is limited to the
Although the term "eligible small employer" is
amount of certain payroll taxes paid, and is claimed as a
defined in the Internal Revenue Code to include
refundable credit on Form 990-T, Exempt Organization
employers with "no more than" 25 FTEs, the
Business Income Tax Return. A tax-exempt eligible small
phase out of the credit amount operates in such a way
employer is an eligible small employer described in
that an employer with exactly 25 FTEs is not in fact
section 501(c) that is exempt from taxation under section
eligible for the credit.
501(a). A tax-exempt employer not described in section
501(c) is generally not eligible to claim this credit.
3. You paid average annual wages for the tax year of
However, a tax-exempt farmers' cooperative subject to tax
less than $53,000 per FTE. For details, see Worksheets
under section 1381 may be able to claim the credit as a
1 and 3.
general business credit as discussed next.
If you had more than 10 FTEs and average
For all other eligible small employers, the maximum
annual wages of more than $26,000, the FTE and
credit is 50% of premiums paid, can be taken against both
average annual wage limitations (discussed later)
regular and alternative minimum tax, and is claimed as
will separately reduce your credit. This may reduce your
part of the general business credit on Form 3800.
credit to zero even if you had fewer than 25 FTEs and
average annual wages of less than $53,000.
Dec 06, 2017
Cat. No. 55222U