How Georgia Small Business Owners Can Save Money on Health Insurance

It's that time of year again. The envelope from your health insurance provider sits on your desk, and you're dreading opening it because you already know what's inside: another double-digit premium increase that will cost your small business thousands. It feels hopeless because there’s very little that you can do to control your costs from a usage/utilization standpoint. However, it is possible for Georgia small business owners to save money on their health insurance premiums without cutting employee benefits.

The Georgia Health Insurance Expense Tax Credit is a program designed to help qualifying Georgia small business owners save on qualifying health insurance expenses.  

So how does this tax credit help Georgia small business owners save money on their health insurance premiums? Let’s dive in.

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The Problem

It probably goes without saying, but increases in health insurance costs have been the largest source of inflation over the last 20 years for most businesses. For many small business owners in Georgia, it’s their second largest expense after payroll.

How bad has the problem gotten?

Unfortunately, the numbers reinforce what you already know. The Kaiser Family Foundation reports that a family health insurance plan has increased from $5,791 a year in 1999 to $25,572 a year in 2024, a ~341% increase. As small business owners, this has turned what should be a helpful benefit for employees into a burden that’s getting worse every year.

What is the Georgia Qualified Health Insurance Expense Credit?

The Georgia Qualified Health Insurance Expense Credit is a program designed specifically for small business owners who may be struggling with their health insurance premiums. The great part is that you may qualify with what you’re already providing for your employees!

The Georgia Qualified Health Insurance Expense Credit:

• Provides a $250 per employee, per year tax credit to help offset the costs of Georgia small business owners.
• Is approved in Georgia law through 2029.

Who qualifies for the Georgia Qualified Health Insurance Expense Credit?

The Georgia Qualified Health Insurance Expense Credit is intended to help small business owners save money on their health insurance premiums.

As a result, the credit is only available to businesses with less than 50 employees. These employees must be located in the state of Georgia and have been employed for 12 consecutive months. You cannot receive partial credits – the employees must have been employed for 12 months, and you do not receive partial credits for just 6 months for example.

Interestingly, the business does not have to necessarily be headquartered in the state of Georgia, as long as the employees are residents.

How does the Georgia Qualified Health Insurance Expense Credit work?

There are several rules related to the Georgia Qualified Health Insurance Expense Credit that impact your small business’ ability to claim the credit. In addition to the employee limitations, there are limitations related to the type of health insurance plans and expenses that qualify.

Health Insurance Requirements

To save money on your health insurance premiums, you must have a health insurance plan that qualifies under IRC Section 223, offered under a Section 125 cafeteria plan. In English, this means plans that are commonly referred to as High-Deductible Health Plans. These are the same types of plans that allow HSA eligibility.

You must also actually contribute to these plans! You can’t just claim the credit without contributing as an employer to the plan as the credit offsets expenses, not just the fact that you offer the insurance.

Finally, this credit cannot exceed your tax liability. If it does, your credits will be carried forward for up to 3 years. Credits cannot be carried back.

To summarize, here’s what you need to know to make this tax credit work for your small business:

• $250 credit per employee annually
• 50 employee firm limit
• Employees must be GA residents
• Employees must be employed for 12 continuous months
• Must be a High-Deductible Health Plan offered to all employees
• Must contribute at least $250 to your employee’s insurance
• Cannot exceed your income tax          

Saving Money in Action

Now that we understand the basics, let’s take a look at how the Georgia Qualified Health Insurance Tax Credit works in action.

Here’s our small business:

• Dermatology of Atlanta
• 48 employees
• Contributes 80% of the cost of health insurance
• Offers both a PPO and HDHP Option (37 employee son HDHP)
• GA Tax Liability $50,000

With this set of facts, here’s how the tax credit could break down:

As you can see above, we assume 11 employees are on the PPO plan and 37 are on the HDHP plan. Only the HDHP employees qualify and this business could be eligible for a $9,250 state tax credit. The best part is that they can claim this credit with no major operational changes on their part!

From a tax perspective, this would have the effect of lowering the small business owner’s Georgia taxes by 18.5% of their amount owed!

At the end of the day, there’s a substantial number of Georgia small business owners who are leaving money on the table for a benefit they’re already offering. There’s also an opportunity for the enterprising small business owner to design a health insurance program to incentivize their employees to elect the HDHP if all of your employees are on a PPO plan.

While it’s not an earth-shattering savings amount, why not save a little money on your taxes to help offset those wonderful premium renewals you receive each year?

How do I claim the Georgia Qualified Health Insurance Expense Credit?

If you think the Georgia Qualified Health Insurance Expense Credit may benefit your small business, the next step is to claim the credit. Luckily, the credit is fairly easy to claim. To claim the credit, all you will need to complete is GA Form IT-QHIE.

Once complete, you submit this form attached to your tax return to qualify for the credit. Unlike other credits which require extensive documentation, there is no explicit requirement that you upload your expenses with the form. Here’s how we would recommend going about this:

1. Speak to your tax professional to verify that you qualify
2. Complete the form
3. Submit with your corporate tax return

This is a very straightforward process. This, coupled with the minimal operational changes required, makes this a very attractive tax credit for small business owners.

Summary

All in all, the Georgia Qualified Health Insurance Expense Credit is one of my favorite tax credits. The reason that this credit is such a favorite is that you can claim it for things you are already doing. This is where simply knowing about a tax credit can make a huge difference in your tax plan. Whether you need to tweak your business or already qualify, the Georgia Qualified Health Insurance Expense Credit can help you save money on your health insurance premiums.

Want to learn more?

Ironclad Wealth Management is a tax and financial planning firm that helps small business owners achieve their long-term goals more efficiently. If you’d like help utilizing the Georgia Qualified Health Insurance Expense Credit or are interested in a full tax and financial plan that explores all of your options, reach out for a quick introductory call below!

Schedule a quick call!

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