Healthcare Reform IS Your Business!

Healthcare Reform (HCR) has been such a hot topic since the first time the words surfaced. Everyone and anyone, regardless of background or position, in the country has wondered what will take place because it carries implications that affect each person. Political Parties and Consumer Groups, along with every group in between have expressed opinions and surmised the impact that such sweeping legislation would bring.

One such group is the business owners. No matter what side of the fence you are on, if you own a business you have wondered how HCR would impact your company, your dream, your retirement plan and YOUR bottom line. The truth is it is still difficult to answer that. And if you are like your fellow business owners, you are too busy running your business and focusing on profit-generating activities that you don’t have the time or resources to pour into learning about HCR and what has resulted from the recent Supreme Court ruling.

The good news is you don’t have to do the research, because our RTS team already has!  RTS will continue to keep you apprised, as details and changes take place. Since the majority of our member base falls below the “large employer” threshold, our focus will be the tax implications to the small employer as defined by the Patient Protection and Affordable Care Act (PPACA).

A few points of interest of business owners relative to PPACA relate to:
• Provides premium subsidy via tax credits for small employers
• Assesses the potential monetary penalties to large employers who do not offer coverage, or the right level of coverage.
• Creates new W-2 reporting requirements for most employers
• Limits employer deductions for retirees’ drug coverage.

Let’s explore some of these areas:
Can a small employer receive federal funding assistance under PPACA?  YES! Small employers providing health benefits to employees receive several benefits, including a new income tax credit. However, certain criteria must be met.

How does PPACA define “Small Employer” for the purpose of qualifying for the tax credit?
Eligible small employers are defined as those employing 25 or fewer full-time equivalent employees with average incomes of less than $50,000 per year, and contributing to employees’ qualified healthcare coverage a uniform contribution of no less than 50% of the premium. These employers are eligible for a partial tax credit. Employers who pay annual wages of great than $50,000 are not eligible for the tax credit. This is due to the purpose of the tax credit, which is to give incentive to employers to provide health insurance to employees earning low wages. Employers can receive the full amount of the tax credit percentage if they employ 10 or fewer full-time employees and pay an average of $25,000 or less in annual wages. Starting in 2013, the payment of premiums must be made through a state Health Insurance Exchange to constitute qualified health plan coverage and receive the federal funding assistance. If an employer chooses to purchase insurance outside an Exchange, that employer will not be eligible for the tax credit.

We will let you digest this “bite-size” portion of the implications of Healthcare Reform on business owners. Our next post will share some information regarding how it will impact the W-2’s that you issue to your employees at the end of the year. Until then, Press On!

About Gary Chavez

Gary is a trusted advisor to small and mid-sized businesses. He offers a comprehensive system to outsource the administrative, tactical and strategic aspects of Human Resources, allowing entrepreneurs to delegate important but often mundane duties to human resource professionals. He helps business owners save time and reduce expenses related to having employees while improving their performance.

In addition to a complete human resource suite of services, he also provides businesses with comprehensive insurance services; health insurance, commercial liability, workers compensation, and commercial auto insurance. In-house insurance specialists can provide proposals from all the major insurance brands and advise you which plan provides the best coverage for the cost.

As a client, you'll be able to offer a world-class platform of employee benefits that allows you to attract and retain top talent, while freeing time to concentrate on the fun, profitable tasks that attracted you to entrepreneurship in the beginning and achieve new levels of success and satisfaction.