Health Care Reform: Impact on Small Business

The Obama Health Care Act and Small Business

How this set of insurance reforms will affect small business is still a matter of debate. Many small business owners are indicating they will curtail hiring and possibly even reduce or stop doing business due to anticipated increases in health care costs. Despite the government’s official stance that this reform act will benefit small businesses and their employees, many feel the opposite will happen. By working with your CFO partner, you can structure your business future now to minimize any negative impact health care reform will have on your small business.

What Will Happen in 2013?

• Some eligible small businesses can claim a 35% tax credit for premiums paid; others will be able to claim 25% if they are tax-exempt.
• Insurance “exchanges” will be created to expand coverage and help stop insurance companies from continuing their “worst practices” and high premiums.
• Coverage will be expanded to include previously existing conditions and to provide transportability of coverage if an employee changes their employment.
• Some low income persons would receive sliding scale subsidies to help pay premiums.
• Penalties would be instituted to encourage business compliance with the Act and mandatory purchase of health care.

What Will Happen in 2014?

• By 2014, a penalty per year and per employee would continue to be charged to businesses with over 50 employees. If health care coverage is not offered, penalty rises from $750 to $2,000 per employee, per year.
• High income individuals (over $200,000/year individual/$250,000/year couples) will be charged a 3.8% surcharge on investment income.
• The tax credit may rise to 50% for certain small businesses with fewer than 26 employees.
• Substantial increases in premium costs could land on small businesses.
• Small business tax credits for premiums can be phased out completely if the business grows to over 25 full time employees or if wages average higher than $50,000 per year.

Staying ahead of this game is a key issue when it comes to controlling company costs for insurance coverage and potential penalties the government may impose for lack of compliance. Going out of business is the last thing anyone wants to see as a result of this legislation. B2B CFO® partners provide state-of-the-art intelligence and knowledge, along with over 6,000 years of collective experience for small businesses needing financial guidance. The time to act is now, not later; please contact me to meet this important challenge and protect your business interests.

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