How Obamacare Will Affect Small Business
Unless you’ve been living under a rock, you’ve heard about the overhaul our healthcare system has had with the emergence of Obamacare. While people will debate for years whether it’s good or bad, one thing is certain there are changes that are coming for small business owners.
Enrollment in the Exchange- Open enrollment for individual and small business into the health insurance exchanges begins Oct. 1, 2013.
States have until the middle of November 2012 to declare whether they will operate their own exchanges or exchanges operated by the federal government. There are some questions about how many states will have their exchanges ready for business by the Jan. 1, 2014, target date. The exchanges will allow individuals and small businesses with up to 100 employees to shop for qualified health insurance coverage online, using a one-stop option.
W-2 reporting- W-2 tax forms issued in January 2013 for wages paid in 2012 for the first time must include a line showing the benefits an employee receives from their employer-sponsored health care. The goal is to provide transparency with relation to health-care benefits & spending.
Tax implications- Dating back to 2010, eligible employers that provide health coverage will again get a tax credit for up to 35% of their contribution toward employee benefits. The credit is calculated based on average wages and number of employees; in 2014 it rises to 50%.
High-income individuals- For single taxpayers with modified adjusted gross income over $200,000 and married taxpayers with $250,000 MAGI, a 3.8% Medicare contribution tax will apply for tax year 2013 to investment income, including interest, dividends, annuities, royalties and rents.
In a recent study by Kaiser Family Foundation, it found that 50% of businesses with 3-9 workers and 73% of firms with 10-24 workers provide health insurance. That contrasts with 98% of firms with 200 or more workers that offer health coverage.
It also reported that small business owners with 1-24 employees now get insurance from the following sources.
– 25% are uninsured
– 6% on Medicaid or Medicare
– 19% obtain insurance from their company
– 25% are dependent on significant other’s plan
– 30% Private insurance
One thing that is clear to all small businesses is that change is coming and the best advice is to be aware of the changes and adapt as quickly as possible. We will continue to keep you abreast of changes as we know them.