Average state-wide premiums for small group markets for determining small employer health insurance credit released, (May. 6, 2010)

The IRS has released the average premium for the small group market in each state for the 2010 tax year for purposes of computing the Code Sec. 45R tax credit for eligible small employers that make nonelective contributions toward their employee’s health insurance premiums. The premiums must be made under an arrangement that requires the employer to pay at least 50 percent of each participating employee’s premiums for coverage provided by a qualified health plan.

Code Sec. 45R was added to the Internal Revenue Code by section 1421 of the Patient Protections and Affordable Care Act (P.L. 111-148, enacted March 23, 2010). The credit for 2010 is equal to 35 percent (25 percent in the case of a tax-exempt organization) of the lesser of: (1) the amount of nonelective contributions paid by the eligible small employer on behalf of employees under the arrangement during the tax year; and (2) the amount of nonelective contributions the employer would have paid under the arrangement if each such employee were enrolled in a plan that had a premium equal to the average premium for the small group market in the state (or in an area in the state) in which the employer is offering health insurance coverage.

Additional average premium rates for the small group market in certain areas within certain states may be issued at a future date. In no event will such rates be lower than the premium rates for a state as a whole.

· Alaska — $6,204 (employee-only); $13,723 (family coverage);

· Alabama — $4,441; $11,275;

· Arkansas— $4,329; $9,677;

· Arizona — $4,495; $10,239;

· California — $4,628; $10,957;

· Colorado — $4,972; $11,437;

· Connecticut — $5,419; $13,484

· District of Columbia— $5,355; $12,823;

· Delaware — $5,602; $12,513;

· Florida — $5,161; $12,453;

· Georgia— $4,612; $10,598;

· Hawaii — $4,228; $10,508;