The U.S. Treasury Department announced today that it will allow qualifying Washington businesses to get tax credits to help pay for up to 50 percent of their employees’ health insurance premium next year.

“This is great news for the small businesses in our state,” said Insurance Commissioner Mike Kreidler. “I know many of them care about their employees and have struggled to provide affordable coverage. Today’s announcement means many businesses will get some relief.”

Under the Affordable Care Act, certain small businesses that provided health insurance to their employees from 2010-2013 were eligible for premium tax credits of up to 35 percent. In 2014, the tax credit was to increase to 50 percent but only if the employer bought the health plan through the state’s Small Business Health Options Program (SHOP) or Exchange.

Washington state is one of two states without a statewide small business exchange or SHOP.  SHOP plans are currently only available in Clark and Cowlitz counties and the only insurer participating is Kaiser Foundation Health Plan of the Northwest (Kaiser).

Until today’s announcement from the federal government, the small business tax credit was only available to qualifying businesses in the two counties with an active SHOP program. It was up to the federal government to make an exception for Washington state.

Now, small businesses that meet the federal guidelines can receive a tax credit to help with the cost of providing health insurance to their employees – even if they purchase the plan outside of the Exchange.

To qualify for a tax credit, a small business must have fewer than 25 full-time employees, pay for at least 50 percent of their employee’s premium and pay an average wage of $50,000 or less.

Unfortunately, small business owners in Clark and Cowlitz counties who want a tax credit must purchase coverage through the SHOP program where only one insurer (Kaiser) is currently participating.

Thirteen health insurers currently participate in Washington state’s small employer market.

For more information, read this overview of the small business health insurance tax credit and how to apply.