Officials at the Internal Revenue Service (IRS) have found no flexibility in the time limits for the small-group health insurance tax credit. An employer can use the small-group tax credit provided in the Patient Protection and Affordable Care Act (PPACA) for only two consecutive taxable years, officials warned in the preamble to new final small-group tax credit regulations.
The IRS developed the regulations to implement the parts of PPACA that added Section 45R to the Internal Revenue Code (IRC).
Before the PPACA exchange Small Business Health Options Program (SHOP) came to life, IRC Section 45R let a small employer use the credit to defray the cost of any major medical coverage. Now, employers that want to get the credit must use it to pay for “qualified health plan” (QHP) coverage from a SHOP exchange.