Glass Jacobson

Tax Planning for BusinessesHealth Care Law Will Benefit Women-Owned Businesses

May 17, 2011 —

As we have mentioned in previous blog posts, the Patient Protection and Affordable Care Act provides tax credits to employers with fewer than 25 workers (with average salaries of less than $50,000) to provide health insurance.  The credit is offered on a sliding scales, as you can see in this health care credit table, with the full credit offered to companies with 10 or fewer employees (with an average wage of $25,000 or less), phasing out for larger companies.

What does this mean for women-owned businesses?  Sources show that the majority of women owned businesses have fewer than 25 employees, making most of them eligible for this tax credit.  From 2010-2013, the full credit covers 35 percent of a company’s premium contribution.  Beginning in 2014, the full credit will cover 50 percent of contributions for up to two years for plans purchased through state health insurance exchanges.  If you are eligible, this is a big help for your business.  Make sure you are positioned to take advantage of the credit.

Questions?

tammy.schneider@glassjacobson.com

sam.cohen@glassjacobson.com

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  • John Spek

    How will the 65% premium mandate;
    the penalty for employee purchase outside the employer but thru the exchange with subsidy;
    interact with the tax credit?

    given:
    Employer group plan costing is higher than individual coverage,
    the legal requirements for employer coverage are much different than for individual coverage, adding costs.
    The rate difference is more pronounced when the individual is well below the employer average age.

    Also – the employee may not want the network the employer selected insurance uses, so the employee may chose to not participate with employer coverage.
    Probable situations are that a below 400% poverty level earner will chose to buy a different plan to:
    retain OBGYN, pediatrician or other doctor,
    or
    chose to buy coverage with full assistance thru the exchange without the employer

    The employer is mandated to provide 65% of the premiums under the 2010 law
    having run the numbers, in today’s rates, with the projected exchange subsidy, the employee will save money by using the exchange for themselves, and forgo paying the 35% premium of employer rates

    Now the employer is subject to extensive fines.

    Have those fines been factored into this point of view?