Small employers in Wisconsin and Washington that lack a health insurance exchange in their county received some relief from the IRS in the form of a notice.

As part of the health care reform legislation enacted in 2010, Congress created a tax credit under Section 45R to motivate small employers to offer or continue to offer health insurance to their employees. To qualify for this credit, an employer must have fewer than 25 full-time equivalent employees and those employees must receive less than $50,000 in annual average wages. 

For taxable years beginning after Dec. 31, 2013, the credit is available for only two consecutive years and only for coverage purchased through a Small Business Health Options Program (SHOP) Exchange. The maximum credit is 50% of premiums paid by eligible small business employers and 35% of premiums paid by eligible small employers that are tax-exempt organizations. There is a credit phase-out for employers with more than 10 employees or average wages by the employer of more than $25,000. 

However, a SHOP Exchange is not available in certain counties in the states of Washington and Wisconsin in 2014. Notice 2014-6, which was issued by the IRS, provides that small employers with a principal business address in those counties will still qualify for the credit for providing health insurance coverage to employees, even though the coverage is not provided through a SHOP Exchange. Please see Notice 2014-6 for a list of the affected counties.

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