State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
The federal small employer health insurance tax credit is generally available to employers with:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The PPACA small employer health care tax credit is designed for employers with 25 or fewer full-time-equivalent employees who pay average annual wages below a set threshold and contribute at least half of the premium cost. In California, employers must purchase coverage through Covered California for Small Business (CCSB) to claim the federal tax credit. The A&H objectives pair this 25-employee credit with the requirement that it be obtained through the state's small business exchange.
Why the other options are wrong
- B) The credit is limited to 25 or fewer full-time-equivalent employees, not 100; larger employers do not qualify.
- C) Fifty employees is the CCSB purchasing ceiling, not the credit threshold, which is 25 employees.
- D) The credit is size-limited; it is not available to employers of every size.
Memory hook
Credit for the little guys: 25 FTE or fewer, bought through CCSB. Bigger shops are on their own.