In 2010, congress passed a controversial health care reform to be reviewed by the president and the House of Representatives. This act caused commotion throughout all of America and raised many questions about this new healthcare reform. Although many of its details are still being ironed out, most of the “Affordable Care Act” has already been determined.
Small businesses are one of the many that this bill will affect. A majority of the bills components will not go into effect until 2014; however the bill allows some small business’s tax credits, before 2014, if they meet the government’s criteria.
Beginning in 2014, small businesses that can suit certain criteria will be able to buy health insurance through an “insurance exchange”. This allows them to decide among a generous amount of plans that would provide better coverage at a lower cost than they would be able to find in the current market. The insurance exchange would also provide cheaper and better options for employees in small businesses that do not already receive healthcare insurance. Also, states will have to create Small Business Health Options Programs, or “SHOP Exchanges”, where small businesses will be able to “pool together” to buy insurance. However, in order to be eligible for this program you would have to fit the government’s definition of a small business which is a business with 500 or less employees and revenue less than $7 million dollars.
Furthermore, if a small business has more than 50 full-time employees, the employer will be required to offer healthcare coverage to all employees, or pay $2000 a year per full-time employee. The coverage offered by the employer has to meet a certain minimal standard, which covers both a specific set of services and 60% of employees overall health costs.
Another incentive is if a small business is willing to pay for 50 percent of the premiums, the Federal Government will pay the other 50 percent. While this will not kick in until 2014, this gives a lot of hope to small businesses in the future.
Until 2014 rolls along and the “SHOP Exchanges” are set up, business who offer insurance with 25 employees or less that have salaries of less than $50,000 are eligible for tax credits that will pay up to 35 percent of health insurance premiums. This tax credit will stay in place and will increase to 50% of health insurance costs for the first two years a company buys insurance through its state exchange.
What you may not know:
Starting in 2012, companies will have to fill out IRS 1099 tax forms for all goods and services that exceed $600 from any producer. This form is supposed to cut the cost of the healthcare reform by keeping companies honest in their tax filings and allow the companies more income which in turn will give the government more money to tax. Also, credit card companies will be required to keep records of any transactions exceeding $20,000 on the 1099 tax form. This way all expenses will be recorded.
Although the health care reform is requiring employers to offer health care coverage to their employees or pay a fine for every employee that is not covered but the government has given many incentives to small businesses, which include tax credits and payments on their premium, to offer health insurance to their employees. The bottom line (“my opinion”) is that the Affordable Care Act will be something that will have a very positive effect on small businesses throughout the United States.