There is little doubt that the health care landscape is changing. Recently, I was able to attend a seminar on the health care changes and the impact on small business. While there is still much to be determined, there are a number of changes that have an immediate impact, and some that require some future planning.
First, a bit of history of what’s changed. The health care act has brought about some changes including brand name drug tax, tanning tax, requiring carriers to spend certain percentages of premiums on healthcare providers for large and small group plans, implementation of the Health Insurance Tax Credit, Age 26 coverage, temporary high risk pools, and mandating certain preventative services. These have all been implemented over the past two years, and as a practical matter have little impact on small or mid-sized group plans.
The pace of change starts to gain momentum now. This month, all plans with open enrollment for 2013 must provide a “Summary of Benefits and Coverage” to all new and existing plan participants. Be sure your broker or carrier provides this new form.
Then in 2013 if you offer a Flex Spending Account the contributions will be limited to $2500. On the tax side of the world, it starts to ramp up:
- Medical expense itemization threshold is increased to 10% from 7.5%
- .9% surtax on wages
- 3.8% tax on investment income (rents, dividends, etc.)
- Medical device tax
Administration also increases with W-2 reporting of each employee’s health insurance benefit.
Lots of cost and administration with little benefit going to consumers or small business.
Health Care Insurance Tax Credit
Implemented in 2010, this confusing tax credit is targeted to employers of up to 25 employees and is phased out as the average wage increases to $50,000. The NFIB has an excellent tax credit calculator to see if you might qualify. If you are under 50 employees, it is worth the few minutes estimate the tax credit. Go here