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