Under the health care act signed into law this year (the Patient Protection and Affordable Care Act), a refundable tax credit is available to small organizations, including tax-exempt organizations, that purchase health insurance for their employees. In order to prepare to administer this credit, the Internal Revenue Service released a draft version of Form 8941(pdf) on its website on September 7, 2010. Form 8941, Credit for Small Employer Health Insurance Premiums, will allow both small businesses and tax-exempt organizations to calculate the tax credit, which may be claimed on filings beginning in 2011.
In addition, since exempt organizations normally do not file income tax returns (Form 990 is an information return, not a tax return), they will be able to claim the credit by submitting a soon-to-be-revised Form 990-T, regardless of whether the organization has unrelated business income liability.
For 2010-2013, the maximum credit for exempt organizations is 25% of the premiums paid. In order to qualify, an organization must have no more than 25 full time employees and an average wage of $50,000. Full credit is only available to organizations with 10 full-time employees or less, with average wages of less than $25,000.
For further information, see the FAQs (Frequently Asked Questions) about the Small Business Health Care Tax Credit posted on the IRS website.
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