Health Care Reform & Nonprofits

There are several recent changes as a part of the health care reform that affect nonprofits in 2010 and 2011. Here are a few:

Small Business Tax Credit

Although most nonprofits do not file an income tax return form, nonprofits that offer health care insurance to their employees may be eligible for a credit. Nonprofits can claim a tax credit if they pay for at least half of the health insurance premiums. The full credit is available to employers with 10 or fewer workers with average annual wages of $25,000. A partial credit is available to employers with up to 25 workers with average annual wages up to $50,000.


Since September 23, nonprofits have an option to grandfather their current health care plan on the renewal date. Nonprofits are then required to inform their employees of material change to their health care plan at least 60 days before the change is effective. To find out more here about the option to grandfather.

Employer Reporting Requirements

The IRS has released a draft Form W-2 which includes a space to list the cost of coverage of employer-sponsored health care plans. However, the IRS has announced that it will defer the reporting requirement so that it is optional in 2011.

SIMPLE Cafeteria Plan

Small employers may now meet safe harbor requirements to offer a simple cafeteria plan. Check with your accountant or insurance representative for more information.


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