Many eligible employers are gaining an understanding of the money the Employee Retention Credit brings to them but often leave out ERTC health insurance costs in their qualified wages paid under their group health plan.
This is leaving money on the table. Let’s investigate how this forgotten section of the ERTC program can help encourage employers to get more money back.
ERTC Overview and ERTC Health Insurance Impact
The global lockdown during the COVID-19 pandemic forced many businesses to shut down. The international business market crashed on multiple levels, with operations coming to a complete stop.
Employers laid off many employees to survive on a bare minimum. Some businesses switched to Ecommerce channels to retain their presence, while others opted for remote employment.
To overcome the challenges employers face during such unprecedented times, Congress passed many programs, including the Employee Retention Credit (ERC) or Employee Retention Tax Credit (ERTC).
The program allows eligible employers to have payroll tax credits to compensate for employee wages and health insurance. However, it is vital to understand how ERTC health insurance premiums apply to various insurance plan holders.
Employees can enjoy many benefits as part of their employment contract when working full-time. One of the essential benefits is health insurance for self and directly-dependent individuals. At any time during their employment, employees can seek insurance premiums for medical procedures according to their insurance plans.
However, the insurance is only applicable if the employee continues to work and meets the eligibility terms. Before the COVID pandemic, no programs like ERTC offered support to furloughed employees. Employers had no practical ways to compensate for sudden job losses due to governmental orders or business crises. The launch of ERTC created a win-win situation for employers and employees. We have covered the details below to help you out.
ERTC Includes Medical Coverage
ERTC-eligible employers can apply for health insurance premiums to cover their employees. Under the ERTC program, an employer is bound to offer employees health insurance benefits compensated by the insurance provider. While valid, qualified health care expenses may apply to small and large employers differently.
Employers eligible for the Employee Retention Tax Credit can receive premiums to cover self and group health insurance plans. The employer may also contribute to the employee’s healthcare flexible spending account (FSA) or health reimbursement arrangements (HRA). However, it is worth mentioning that tax credit-eligible healthcare expenses are only for certain employees.
Healthcare expenses depend on a company’s average number of full-time workers in 2019. For instance, employers with less than a hundred employees could receive premiums for all employees during a partial or complete company shutdown due to the pandemic-imposed crisis.
On the other hand, employers with more than a hundred employees could receive healthcare insurance for those who did not work while the company faced a decline.
Regardless of the company size, every employer is eligible for ERTC and can receive health insurance premiums for laid-off employees after meeting the declared criteria. The conditions include partially or fully suspended businesses due to government orders and calendar periods when employers face a financial decline.
The ERTC program helped many employers rise above the financial challenges imposed by the COVID-19 pandemic in the past couple of years. Although the program was specific to the pandemic period, employers can benefit from it for an extended period to ensure their sustainability in the competitive market.
Qualified Health Expenses with Tax Credits
To understand the tax credit values covering the qualified health expenses under Internal Revenue Service ERTC, it is crucial to know when qualified health expenses meet the criteria of paid qualified wages.
Suppose an employer allocates on a pro-rata (equally proportioned) basis among covered employees and a pro-rata for the coverage periods. In that case, the health plan expenses can be treated as qualified wages.
When employers underwent a shutdown crisis during the global lockdown, they could not meet employees’ health insurance needs. As a result, hundreds of employees lost their healthcare coverage.
To overcome the crisis, ERC or ERTC set policies to accommodate furloughed employees with tax credits to offer coverage for the hours that employees spend at work.
According to the IRS guidelines, employers with a hundred or fewer employees could receive tax credits up to $10,000 per employee for each calendar quarter covering qualified wages.
Moreover, employers with a hundred or more employees could receive tax credits of up to $10,000 per employee for the time that employees did not offer services.
Under the comprehensive IRS guidelines, employers can check their eligibility and review the conditions suitable for Employee Retention Tax Credit (ERTC). The tax credit for a qualified health plan is only applicable if the received amounts are excluded from employees’ gross income.
The credit facility allows workers to seek timely healthcare assistance under their insurance plans while their employer shuts down the operations in a specific capacity to adhere to governmental orders.
If you wonder whether the qualified health plan costs cover the proportion paid by both the employer and the employees, the answer is yes.
Generally, the expenses cover a mutual contribution with the employee’s proportion as a pre-tax pay reduction. While this is valid, the qualified health plan does not include the employee’s after-tax contributions.
ERC Qualified Health Plan Expenses Dental Included
The qualified health expenses offer medical coverage for employees in major and minor capacities. Typically, insurance premiums for employees cover major healthcare expenses, including surgical procedures, emergency cases, and maternity expenses.
Depending on their insurance plans, the plans also cover accidental coverage for employees and their families.
The ERTC program covers major healthcare expenses and offers coverage for dental procedures and other healthcare management conditions under COBRA guidelines.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a health insurance program that enables eligible employees and their dependent group (family) to enjoy continued health insurance benefits after losing jobs.
If we review the COBRA guidelines to understand the ERTC health plan compensation, employees who lose their jobs (voluntarily or involuntarily) are eligible for a qualified health plan. Employees working for decreased employment hours and losing employer insurance (as a result) are eligible for ERTC coverage.
Since dental procedures may be costly, employees often fail to meet the expenses. Insurance companies may have different policies for employers offering benefits to employees.
Some insurance premiums cover essential dental services. However, surgical procedures may not be covered in the same plan. Some insurance plans may cover extensive dental procedures to facilitate those in need.
Complementary ERTC Pre-Qualification and Evaluation
Despite the IRS guidelines, many employers are unaware of the insurance premiums they can benefit from. The complicated guidelines may raise many questions in employers’ minds. We have a solution if you have difficulty understanding the ERTC eligibility criteria and health insurance coverage breakdown.
Seeking assistance from an ERTC consultant can help you evaluate the funds you can claim under the ERTC program. Small businesses have little to no margin for bearing uncalled-for expenses.
With the help of an ERTC expert, you can take the burden of uncertainty off your shoulders. Getting advice from someone who knows the ins and outs of ERTC health insurance refunds is always beneficial.
ERTC experts can make it easy for small business owners to evaluate their Employee Retention Tax Credit eligibility. Our experts concentrate exclusively on ERTC to help small businesses claim maximum refunds on claims.
You can review the pre-qualification check, or call us at 360 641-7709 to have any questions answered or get a complementary ERTC calculation for your company. The simple process saves you the hassle and time while focusing on your business operations.
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