Expansion and simplification of credit for employee health insurance expenses of small employers

(a)

Increase in maximum number of eligible full-Time employees

Subparagraph (A) of section 45R(d)(1) of the Internal Revenue Code of 1986 is amended by striking 25 full-time equivalent employees and inserting 50 full-time equivalent employees. (b)

Modification of phaseout of credit amount

(1)

In general

Subsection (c) of section 45R of such Code is amended to read as follows:

(c)

Phaseout of credit amount based on number of employees and average wages

(1)

In general

The amount of the credit determined under subsection (b) shall be adjusted by multiplying— (A)the amount determined under subsection (b), by (B)the product of the amount determined under paragraph (2) and the amount determined under paragraph (3). (2)

Employee adjustment

The amount determined under this paragraph is a fraction (not more than 1) the numerator of which is the number by which the total number of full-time equivalent employees of the eligible employer is less than 50 and the denominator of which is 30. (3)

Wages adjustment

The amount determined under this paragraph is a fraction (not more than 1) the numerator of which is the amount by which the average annual wages of the eligible employer is less than twice the dollar amount in effect under subsection (d)(3)(B) and the denominator of which is such dollar amount.

(2)

Conforming amendments

(A)Subsection (a) of section 45R of such Code is amended by inserting , as adjusted under subsection (c) after the amount determined under subsection (b). (B)Subsection (b) of section 45R of such Code is amended by striking Subject to subsection (c), the and inserting The. (C)Subparagraph (B) of section 45R(d)(3) of such Code is amended by striking subsection (c)(2) and inserting subsection (c)(3). (c)

Average annual wage limitation increase

(1)

2012 and 2013

Clause (i) of section 45R(d)(3)(B) of such Code is amended to read as follows:

(i)

2010, 2011, 2012, and 2013

The dollar amount in effect under this paragraph is— (I)for taxable years beginning in 2010, 2011, or 2012, $25,000, and (II)for taxable years beginning in 2013, $28,500.

(2)

Subsequent years

Clause (ii) of section 45R(d)(3)(B) of such Code is amended by striking $25,000 and inserting $28,500. (d)

Repeal of uniformity requirement for contributions

Paragraph (4) of section 45R(d) of such Code is amended— (1)by striking in an amount equal to a uniform percentage (not less than 50 percent) of the premium cost of the qualified health plan, and (2)by inserting (in an amount not less than 50 percent of the premium cost of the qualified health plan) after nonelective contribution. (e)

Repeal of limitation based on state average premiums

(1)

In general

Subsection (b) of section 45R of such Code is amended to read as follows:

(b)

Health insurance credit amount

Subject to subsection (c), the amount determined under this subsection with respect to any eligible small employer is equal to 50 percent (35 percent in the case of a tax-exempt eligible small employer) of the aggregate amount of nonelective contributions the employer made on behalf of its employees during the taxable year under the arrangement described in subsection (d)(4) for premiums for qualified health plans offered by the employer to its employees through an Exchange.

(2)

Conforming amendment

Paragraph (2) of section 45R(g) of such Code is amended by inserting and at the end of subparagraph (A), by striking , and at the end of subparagraph (B) and inserting a period, and by striking subparagraph (C). (f)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2012.