Health care reform is the new law.  The new law will be bring many new changes with government mandates.
 
Our firm is diligently working on the changes that will come to small business owners with under 50 employees, we will be here to help.  In the coming months there will be a offering full health care compliance analysis of current group health plans in place. We also want to make you aware of the tax credits available in 2010 and the new mandates that take effect this year. 

New Mandates Effective Immediately:

    1.Individuals and employer group plans that wish to keep their current policy on a grandfathered basis can only do so if the only plan changes made are to add or delete new employees and any new dependents. In addition, an exception is made for employers that have scheduled plan changes as a result of a collective bargaining agreement. Once a plan loses its grandfathered status, it will be subject to all of the market reforms in the legislation when they take effect, regardless of where coverage is purchased (either through an exchange or outside of an exchange). However, most of the market reform provisions slated to take effect in the next six months will apply to all plans, whether or not they hold grandfathered status.

    2.Eligible small businesses (those that have no more than 25 FTEs, pay average annual wages of less than $50,000 and provide qualified coverage) are eligible for phase one of the small business premium tax credit. Small employers will receive a maximum credit, based on number of employees, of up to 50% of premiums for up to two years if the employer contributes at least 50% of the total premium cost.

    3.Employers that provide a Medicare Part D subsidy to retirees will have to account for the future loss of the deductibility of this subsidy in 2013 on liability and income statements. While the elimination of the deductibility does not take effect until 2013, there could be an immediate accounting impact.

If you are a client of the firm and we do not currently manage your group health insurance account, please contact us immediately so we may email you the BOAR approval process form.  We will actively monitor all clients accounts and our service offerings will expand over the years to keep your business in  federal and state compliance.

Health Care reform 2010-2014

Our firm is diligently working on the changes that will come to small business owners with under 50 employees, we will be here to help.  In the coming months there will be a full analysis of current group health plans in place, so as to stay in compliance. We also want to make you aware of the tax credits available in 2010 and the new mandates that take effect this year. 

Eligibility Rules
For-profit and tax-exempt employers may qualify. However, all three of the following criteria must be met:

1. The employer must cover at least 50 percent of health care coverage costs for workers based on the employee-only (single) rate.
2. The employer must have no more than the equivalent of 25 full-time workers (not counting owners or family members).
3. Employees’ average annual wages (not counting owners or family members) must be below $50,000.

   Credit Amount

   • The maximum credit is worth up to 35 percent of a company's premium costs in 2010 (25 percent for tax-exempt employers).
     • Note that the rate will increase to 50 percent on Jan. 1, 2014 (35 percent for tax-exempt employers).
     • The credit gradually phases out for employers with average wages between $25,000 and $50,000, and for employers with the equivalent of between 10 and 25 full-time workers.

    

    

    

 

 

 

SUBJECT: One Page Form for Health Care Tax Credit for Small Businesses

December 2, 2010
Dear Small Business Owner,

As I’ve traveled the country this year, I have heard from many of you who are looking forward to the new tax credits, health insurance exchanges, and other tools that will help you provide health insurance coverage to your employees as a result of the Affordable Care Act.

The most immediate benefit of the new law is a tax credit that will help America’s smallest employers and nonprofit organizations (less than 25 full-time equivalent employees with average annual wages below $50,000) who have been hit hardest by premium increases in recent years.  Today, I’m pleased to announce that the Administration is releasing a one-page form and instructions (available at http://www.irs.gov/newsroom/article/0,,id=231928,00.html?portlet=7) on how to claim this credit for the 2010 tax year.   In addition, new guidance released today answers questions that many of you have asked related to: your current contribution arrangements, eligibility for certain religious institutions, and participation by multiemployer health and welfare plans. In each case, the Administration has worked to ensure that a broad range of small businesses can qualify.

These credits are available for tax years 2010 through 2013 and for any two years after that.  Through 2013, the maximum tax credit is 35 percent of premiums paid by small employers and 25 percent for eligible tax-exempt organizations.  Beginning in 2014, those levels increase to 50 percent and 35 percent, respectively.  Importantly, these credits are just one of many benefits in the Affordable Care Act.  Most notably, in 2014, firms with up to 100 workers will be able to pool their buying power and reduce their administrative costs by purchasing coverage through a health insurance exchange.

Finally, the new law strengthens America’s entrepreneurial spirit, overall.  For example, it outlaws discrimination against those with pre-existing conditions, giving more Americans the ability to break out of “job lock” and start their own companies.  The new law also prohibits insurance companies from dramatically increasing premiums for a small business just because one worker gets sick.

Overall, the Affordable Care Act is a critical tool that will help millions of small business owners provide health insurance to people who you often consider to be members of your extended family – your employees.  As a nation, we owe you nothing less as you work to grow, create jobs, and lead us toward full economic recovery.

Warm regards,
Karen Mills
SBA Administrator