According to the Congressional Budget Office, small businesses are expected to save an estimated $40 billion by 2019, due to the Small Business Health Care Tax Credit. The tax credit is effective retroactive to January 1st, 2010 and covers up to 35 percent of a small business’s premiums, with the rate increasing to 50 percent on January 1st, 2014.

While non-profit organizations are eligible for the credit, they will receive a lower percentage. Tax exempt organizations will be able to receive up to a 25 percent tax credit in 2010, which will be raised to 35 percent in 2014.

The tax credit has broad eligibility, covering 4 million small businesses. Any business that pays at least 50 percent of employee health care costs, employs the equivalent of 25 or fewer fulltime workers (allowing eligibility for companies with 50 part-time workers), and pays an average employee salary of $50,000 or less (not including owners and their family members) will be eligible for the Small Business Health Care Tax Credit.

The maximum credit of 35% is available for small businesses with 10 or fewer fulltime workers and an average salary of $25,000 or less. For businesses that pay employees between an average of $25,000 and $50,000, the tax credit gradually phases out. The gradual phase out also applies to businesses that employ an equivalent of 10 to 25 full time workers (20 to 50 part time workers).

Businesses are able to claim the credit for a total of six years. They will be eligible to claim the credit for four years, from 2010 to 2013, and then any two years after the 2013 date.

To keep businesses from abusing the system by picking a high-cost plan, the Small Business Health Care Tax Credit will only be eligible for the average health insurance cost of the state where the business is located. This information will be provided by the IRS at a later date.

For more information, refer to the IRS website at http://www.irs.gov/newsroom/article/0,,id=220809,00.html?portlet=6.

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act. Along with the Health Care and Education Reconciliation Act of 2010, this legislation will make significant changes to our current health care system.

The Act adds new responsibilities for employers and insurance carriers. While most of the provisions will start in 2014 or later, some provisions are effective right away or within a short period of time after enactment.

Effective 2010

• Small-Business Tax Credit. A tax credit of up to 35 percent of the employer’s health care contribution is available for qualified small employers (any employer with no more than 25 full-time employees and average wages of less than $50,000). This tax credit will increase to 50% starting in 2014 once exchanges are operational.
• Early Retirees. A temporary reinsurance program is provided to employers that offer coverage to early retirees between the ages of 55 and 64.
• Health Plan Changes. 1) Plans must offer unlimited lifetime benefits and annual benefit limits will be restricted. 2) Pre-ex conditions will be prohibited for children under 19. 3) Recissions are prohibited except in the case of fraud. 4) Plans must cover certain preventive health services at no cost to the insured. 5) Dependent coverage age limit extended to 26.
• Federal High Risk Pool. Temporary establishment of a high risk health insurance pool for individuals unable to find insurance elsewhere.

Effective 2011

• W-2 Reporting. Employers must report value of health care benefits provided on employee w-2s, but not as taxable income.
• Higher Penalty Tax on Non-Qualified Health Savings Account (HSA) Withdrawals. Non-qualified withdrawals will be taxed at 20% versus the current 10% penalty.
• Cafeteria Plans. A new Simple Cafeteria Plan is created through which small employers (less than 100 employees) can easily provide tax-free benefits to their employees without the administrative burden of sponsoring a cafeteria plan.
• Standardized Definition of Qualified Medical Expenses. Costs for over-the-counter medications obtained without a prescription will no longer be considered a qualified medical expense.

Effective 2013

• Flexible Spending Account Limits. Annual contribution limits are reduced to $2,500 per year, with CPI increases available in future years.
• Itemized Deduction for Medical Expenses. The Act increases the income threshold for claiming the itemized deduction for medical expenses from 7.5 percent to 10 percent. Individuals over age 65 would be able to claim the itemized deduction for medical expenses at 7.5 percent of adjusted gross income through 2016.
• Higher Payroll Taxes for High Income Earners. The hospital insurance tax rate will be increased 0.9 percentage points for wages over $200,000 for individuals and $250,000 for those filing jointly.

Effective 2014

• Employer Coverage Mandates. Employers with 50 or more employees who do not offer employee health coverage will pay $2,000 annually for each full-time employee, excluding the first 30 full-time employees. The penalty is increased to $3,000 for any full-time employee receiving a federal tax credit for coverage, because his or her employer health coverage is considered “unaffordable.” Coverage is considered “unaffordable” where the employee contributes more than 9.8 percent of his or her income, or the employer contributes less than 60 percent of the actuarial value of the plan.
• Insurance Exchanges. Exchanges are created at the state level starting in 2014, where individuals and small employers can shop for health coverage. Initially, the exchanges would be available to individuals and small groups (less than 100 employees), unless the state opts to cover only groups with up to 50 employees. Starting in 2017, states could open the exchanges to larger groups.
• Wellness Programs. Employers can offer larger rewards, up to 30% of the cost of coverage, to employees for participation in a wellness program or for meeting certain health-related goals.
• Individual Tax Credits. Credits are available for people with incomes up to 400 percent of the poverty level for insurance purchased through an exchange.
• Health Plan Changes. 1) Insurers cannot refuse to issue coverage on any individual due to pre-existing conditions. 2) Higher rates cannot be charged to any individual based on health status, gender or other demographic factors. 3) Coverage cannot be non-renewed or dropped because an individual participates in a clinical trial.

Effective 2018

• High Value Plan Excise Tax. A nondeductible excise tax of 40 percent is imposed on any health insurance plan with combined annual employer/employee premiums exceeding $10,200 for individual coverage and $27,500 for family coverage. The tax would only apply to premiums in excess of the threshold.

• Customization…for your company, using your logo, colors and images; Personalized…to each individual employee.
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We are committed to each individual employer—to be personable, responsive, and to earn your confidence as we work together producing your employee benefit statements.

In a recent study, employers ranked effective communications during open enrollment as their number one challenge, as employees become increasingly engaged consumers of healthcare and other employer benefits.

Our new enrollment forms are…

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• With more than 20 years employee communications experience, myBenefitStatements is a skilled partner.

While the use and popularity of the web has increased dramatically, many employers prefer to use hard copy open enrollment forms.  Employers and employees alike face an ever-increasing complex myriad of benefit options leaving many employers to look for a combination of tools that create a more tangible approach.  Hard copy, easy to complete forms from myBenefitStatements are one of our specialties.

myBenefitStatements collaborates with hundreds of brokers and employers all over the country to create effective employee communication tools.  Employees will find our customized enrollment forms appealing and easy to understand and complete.

To see samples of our enrollment products visit http://www.mybenefitstatements.com/samples .  If you prefer to see a hard copy sample…give us a call and request a free supply of benefits enrollment forms to show your clients.  Please e-mail or call Sarah Fakan, Sales & Marketing Director, at (800) 865-4485 ext. 104 or Info@myBenefitStatements.com.

Employee communication is critical. You can communicate the value of your benefits program through attractive and affordable benefit statements showing your employee the value of their total compensation in an easy-to-understand format.

Your customized employee benefit statements can be presented in a 1-page, newsletter style or tri-fold format. Whatever your needs – myBenefitStatements has the solution!

Open enrollment election and confirmation forms are also available.