A provision in ObamaCare provides an average $2,700 tax credit to businesses with less than 25 employees and average salaries below $50,000. As many as four million companies are eligible for this reward for providing health insurance to their workforce. According to CPA Chris Wright, only 170,300 businesses have applied for the tax credit, possibly due to the complex, onerous documentation required. “It’s not intuitive. You could easily end up paying your tax professional or CPA that much money to prepare the paperwork for the tax credit.”
Navigating the quagmire that is ObamaCare will not be easy for businesses. Changes in healthcare insurance are already having an impact on companies large and small and their employees.
Lifetime limits on coverage have been eliminated; policies can’t be cancelled because of medical conditions; children can’t be denied coverage because of pre-exiting conditions; dependents can stay on their parents’ health insurance until age 26.
Exactly one year from now, businesses with 50 or more employees will be required to provide health insurance for their employees. Different rules apply for low wage jobs. Determining how seasonal or part-time employees translate into full time equivalents is another question.
“The big issue is the minimum acceptable coverage and essential benefits. It has not yet been established. How much is this going to cost your business? The answer is we don’t know,” Wright said. Uncertainty about the ultimate parameters of coverage will continue for months. “But by January 1, 2014, everyone must purchase some sort of health insurance. At companies with fewer than 50 workers, that responsibility falls on the employees themselves.”
Some companies are already considering paying the penalty for not providing health insurance. “The penalty is not tax deductible,” Wright noted, “so opting to pay the fine may not be the cheapest way out.” To avoid different penalties it is critical that businesses perform the related calculations ahead of time.
For more of this story by Eileen Mattei, pick up a copy of the January edition of Valley Business Report, on news stands now, or visit the “Current & Past Issues” tab on this Web site.