Obamacare and the business owner…..what you should know.

IF YOU ARE A SMALL BUSINESS OWNER…you should know that OBAMACARE for most of its entirety is here to stay. Now is the time to keep working hard and executing our plans. For all intents and purposes, here is a break down on what you should know about OBAMACARE;
First, the Good News: Starting a business from scratch is hard and for the small entrepreneur there is help. If you cannot afford or cannot qualify for health coverage, you will have new options starting in 2014. Financially, there are subsidies available that you can apply for along with Medicaid. As far as your health is concerned, under Obamacare, you cannot be denied coverage….and if you offer health coverage to your employees, you will likely receive a tax credit….something to think about for your bottom line for sure.
Here is the not so good news: There are currently no price caps on health insurance, we have seen this first hand especially in the last 3 months. Insurance companies are raising rates to pay for increased man hours to learn, implement and manage the increased regulations and taxes that have come with Obamacare. We anticipate the insurance carriers will continue to raise rates before competition in 2014. If you have more than 50 employees, you’ll have to provide coverage or pay a fine beginning in 2014. As of 2013, there will be new taxes on some types of income, especially if you are successful.
Here is the bottom line and a few suggestions you need to consider: If you are self-employed or have a business with fewer than 25 employees, it could be financially advantageous for you to be incorporated or an LLC (limited liability company) and provide coverage through the business (rather than buy or have your employees buy coverage on an individual basis). As of now, Texas will NOT have a state insurance exchange set up for consumers to buy health coverage from the government and private companies. Even if the legislature were to try and push a bill through setting an exchange up in the 2013 session, it would most likely be vetoed by the governor. However, a federal exchange is planned to be available by 2014 for states that do not have exchanges ready to go.
HEALTH CARE: Major provisions of the act and when they take effect: Here is a snapshot from the thousands of pages that make up Obamacare;
Tax Credit-Small businesses with fewer than 25 employees that pay at least 50% of the health care premiums for their employees qualify for a tax credit up to 35% of your premiums (50% after 2014 if your purchase insurance through an exchange). How much of a credit you’ll get depends on the number of employees you and have and their average wage. The tax deduction is NOT available to sole proprietors, so you may want a different corporate legal form
Exchanges-Beginning in 2014, the biggest potential benefit may kick in with the establishment of Small Business Health Options Programs (SHOP) exchanges. These are intended to enable small companies (less than 100 employees) to pool together to have greater buying power. Theoretically, this should result in lower premium costs. Again, there will not be an exchange in Texas, so you would have to use the federal one that is planned.
Mandatory employer provided coverage- Small businesses with fewer than 50 employees are exempt from mandatory requirements. Businesses with more than 50 employees will be required to provide coverage as of 2014 or pay a fine of $2,000 per employee, after the first 30 employees.
Mandatory personal coverage- Also, as of 2014, you’ll be required to have health insurance or pay a fine. If you have to pay more than 8% of your income for the cheapest plan, you’re not penalized.
Pre-existing conditions- Since June 2010, individuals who have not been able to get insurance because of pre-existing conditions have been able to join a high-risk insurance pool. Beginning in 2014, insurance companies cannot deny insurance to adults based on pre-existing conditions.
Preventive care- Since September 2010, coverage must include include basic preventive care. As many small businesses can now only afford catastrophic coverage, this may mean additional benefits.
Taxes- Starting this past January of 2013, if you make over $200,000 (individual) or $250,000 (family), your Medicare tax rate will increase from 1.45% to 2.35%. A bigger potential tax bite may hit small business owners who receive capital gains, dividend or interest income with an additional 3.8% tax on that income.
‘Cadillac’ plans-Starting in 2018, employers who provide insurance costing more than $10,200 for individuals or $27,500 per family must pay a 40% tax on the excess cost of the premium. This could be a big burden on small businesses, as many premiums are already at that rate for even basic coverage.
As with anything in life, especially when dealing with the Federal Government, some of these provisions outlined here are subject to change……but highly unlikely.
Please call us if you have any questions regarding this blog or if you just have questions about insurance in general and want to discuss your needs and how we can help. 979-694-1555 or www.wegibson.com

Posted on: April 19th, 2013 at 9:41pm by jeffmurski. Filed under: Uncategorized

Get a Quote or call for a quote at Navasota: 936-825-6565, College Station: 979-694-1555,
Houston Line: 713-231-0020, Caldwell Line: 979-200-6200