July 17, 2012

Ok, so like it or not Obama Care is the law of the land and we, as business owners, have to deal with it.

Whether you like it or not you need to know how the 21 new taxes in the plan will affect you and your business as we move forward.

PPACA requires most adults not covered by an employer or government-sponsored insurance plan to maintain health insurance coverage or pay a penalty, a provision commonly referred to as the individual mandate. People earning less than four times the poverty line ($92,200 per year for a family of four) will receive tax credits to subsidize their purchase of insurance.

That means if you earn less than four times the poverty line, Uncle Sam will help you pay for your insurance premiums, if you don’t already get help from your employer.

What is happening shortly is;

Effective by August 1, 2012

• All new plans must cover certain preventive services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance. Women's Preventive Services – including well-woman visits, support for breastfeeding equipment, contraception and domestic violence screening – will be covered without cost sharing.

The Employer Mandate

·         ObamaCare’s employer mandate is among the new laws most anti-growth provisions. When implemented, it will force most American business firms to offer government-approved health insurance to their employees or else pay new federal taxes for not doing so. This costly new requirement will make it more expensive for firms to hire workers in the future. Consequently, it will destroy jobs, and many firms are likely to slow down on hiring in anticipation of its implementation.

“Free-Rider” Provision

·         ObamaCare does not impose a straight-forward requirement that employers offer health insurance to workers. Proponents of the new law wanted to avoid the charge that the new law was directly imposing new costs on American business. So, instead, they created a back-door mandate, what they call the “free-rider” provision.

·         If a firms with at least 50 workers has a full-time employee who is getting federally-subsided insurance through an ”exchange,” then that employer must pay a penalty for failing to offer that worker acceptable insurance on the job. (Workers that are offered qualified coverage by an employer are ineligible for the new insurance subsidies provided in the exchanges.)

·         The tax is scheduled to begin in 2014 and the Congressional Budget Office estimates it will bring in approximately $10 billion in annual revenue once it’s fully implemented.

What this means to you as an employer is if you have less than 50 employees you have no requirement to provide insurance BUT your employees that earn more than the poverty level will be expected to purchase insurance or pay a tax (fine). This will impact them and they will need to ask you for a raise. Since there will be no previous conditions clause they will likely wait until they have a problem to buy coverage and claim their subsidy, since paying the tax (fine) is cheaper.

The minimum individual penalty is $95 in 2014, $325 in 2015, and rising up to 2.5 percent of income (or $2,085 maximum) per family in 2016. That means the first-year spread between the penalty and the cost of coverage for an individual may be 20 to 1 or 30 to 1.

What this means to you as a business owner making more than 400% of the poverty level is that you are required to buy health care or pay a tax (fine). The cap on the tax (fine) I believe is about $2,085. Still cheaper than healthcare until you need it.

Health Insurance Premiums and Cost Sharing under PPACA for average family of 4.[13][99][100][101][102]
Income % of federal poverty level	Premium Cap as a Share of Income	Income $ (family of 4)a	Max Annual Out-of-Pocket Premium	Premium Savingsb	Additional Cost-Sharing Subsidy
133%	3% of income	$31,900	$992	$10,345	$5,040
150%	4% of income	$33,075	$1,323	$9,918	$5,040
200%	6.3% of income	$44,100	$2,778	$8,366	$4,000
250%	8.05% of income	$55,125	$4,438	$6,597	$1,930
300%	9.5% of income	$66,150	$6,284	$4,628	$1,480
350%	9.5% of income	$77,175	$7,332	$3,512	$1,480
400%	9.5% of income	$88,200	$8,379	$2,395	$1,480
a.^ Note: In 2016, the FPL is projected to equal about $11,800 for a single person and about $24,000 for family of four.[103][104] See Subsidy Calculator for specific dollar amount.[105] b.^ DHHS and CBO estimate the average annual premium cost in 2014 to be $11,328 for family of 4 without the reform.[99]

If you want to know more, contact us and we’ll send you our review of the Patient Protection and Affordable Care Act

July 4^th

So what is going on in the world?

Europe is struggling. Why should we care? Oh, yes I forgot, they are those places from which most of us trace our roots. Our ancestors, some not all that far removed, left those places to come here because those places were messed up. Not much has changed, except that we are now trying to copy them in many ways.

Additionally, if Europe doesn’t buy as many Chinese products, China will have a problem with unemployment. To solve their problem the Chinese will subsidize its businesses and ship cheaper goods to the USA. Good for the consumer, bad for jobs.

On the subject of jobs, as the internet grows to represent a larger portion of the retail sales areas to reduce their rent expense. Some retailers are becoming mere pickup locations for online purchases. Harris Teeter supermarkets, for example, offer online order with pickup at store service. Think about how that might affect your business. Fewer employees need to be better trained because I only come in to the location IF I need information/advice. This translates into a need for fewer but better trained employees. The key is better trained. What is your plan to get your staff ahead of your competitors? What kind of training is needed? What kind of training makes them better at their job? What kind of training simply makes them better people? Overall, both help you and your business succeed. If you don’t know the answer to these questions we can help you work through the list of possibilities and find affordable solutions.

Keep your eye on Europe. If they end up in chaos, our economic recovery could be facing some really stiff headwinds and may well slip back into recession. Whether we meet the technical definition of recession or not, it isn’t going to feel good.  Second half of 2012 and First part of 2013 could get ugly. Be prepared.

If you need help getting ready contact us at www.northbrunswickfinancial.com . We can help with strategic plans, training and all the other management issues you face.

The Economy and your Business

Hi all,

Well the stock market is up almost 500 points today and everyone is euphoric. New employment numbers are up, people are hiring! Maybe I’m just a curmudgeon but hiring is up for the Christmas selling season. Don’t be surprised in January when we see a jump in the unemployment numbers.

We are still a long way from being out of trouble. Europe has some really big problems and, lest you think that’s there and I’m here, remember that a lot of people here work for companies who make a lot of their money there. IBM, GE, Corning, even Wal-Mart and many others. Big global players stand to get hurt if Europe goes back into recession. And that will domino over to the USA. Even China senses the potential and has reversed itself and lowered interest rates to stimulate domestic activity.

Housing is still in the dumpster. Foreclosures are going to exert downward pressure on prices for some time yet to come. Maybe a couple years, maybe longer. I’ve long said that housing is the one things Americans always judged as their nest egg. Once that is gone or at least made questionable, they will no longer feel safe taking on debt and spending to buy things they don’t need UNLESS it is a real deal. Retail sales are up this year but the amount and depth of the discounting to drive sales has squeezed profit margins hard.    

As they used to say in the military, it is time to be ready, but keep your powder dry. There will be some tough weather ahead before this storm is over.  

If you need help keeping on top of your business expenses and finding inexpensive ways to keep key employees happy, call us. We’re happy to work with small business owners to help them survive and grow in these tough times.

North Brunswick Financial Alliance LLC - 910-632-4944

One Stop for ALL your business services.