FEATURE Costs and Benefits


Under the health care reform law, some small businesses that extend health insurance to their employees will be eligible for tax benefits. Others that don’t offer coverage may pay penalties. BY SAHELY MUKERJI


L


ast June, the US Supreme Court upheld the heart of President Barack Obama’s health care reform law: the


individual mandate that requires all Americans to obtain health insurance by 2014. To support employers in providing health care benefits, that law—the Patient Protection and Af- fordable Care Act (ACA)—contains short-term provisions,


SMALL EMPLOYER


Scenario 1: Small Employer Eligible for the Tax Credit Small employers that provide health care coverage are eligible for a tax credit if they: ■


have 25 or fewer full-time equivalent (FTE) employees for the tax year;


■ ■


pay an average annual wage of less than $50,000 per full-time employee; and


pay at least 50 percent of the premium cost under a “qualified arrangement.” In a “qualified arrangement,” an employer pays 50 per- cent or more of the cost of the employee-only premium for


LARGE EMPLOYER


Scenario 3: Large Employer that May Pay a Penalty An “applicable large employer” is one that has 50 or more FTE employees, not counting seasonal workers. Effective January 1, 2014, these employers must pay a penalty if they have at least one full-time employee who receives a premium tax credit or cost-sharing reductions under the health plan they are enrolled in through the state insur- ance exchange. The payment is assessed on whether the employer offers health coverage. ■


If the employer does not offer coverage, the business must pay $2,000 for each full-time employee, not counting the first 30 employees.


If the employer offers coverage, the business will be re- quired to pay $3,000 for each employee who receives as- sistance or $2,000 per full-time employee (not counting the first 30 employees), whichever is less. Whether the coverage offered meets the criterion of having “minimum essential” value and is considered “inad-


■


equate” or “unaffordable” will be determined by the secre- tary of the US Department of Health and Human Services. ■


Coverage is considered “inadequate” if it covers less than 60 percent of the total allowed costs of benefits.


■


Coverage is considered “unaffordable” if the employ- ee’s share of the premium is more than 9.5 percent of the employee’s household income.


Scenario 4: Large Employer that Will Not Pay a Penalty An “applicable large employer” that does not have any full-time employees who receive a premium tax credit or cost-sharing reductions under the health plan that they are enrolled in through the state insurance exchange will not pay a penalty.


coverage through a state-licensed company for traditional health insurance. This contribution requirement also ap- plies to add-on coverage including vision, dental and other limited-scope coverage.


Scenario 2: Small Employer Not Eligible for the Tax Credit Small employers that have more than 25 FTE employees but fewer than 50 FTE employees and pay an average an- nual wage of more than $50,000 per full-time employee are not eligible for a tax credit.


such as tax credits, for small businesses. The law also in- cludes penalties for “applicable large employers” that do not offer “minimum essential coverage” that is “affordable” to their employees. Is your ASC qualified for a tax credit or will it be subject to penalties under the new law?


The information in this article is taken from the Department of Treasury’s General Explanations of the Administration’s Fiscal Year 2013 Revenue Proposal and the Small Business Majority web site. ASCs should use this information as a basic guideline and consult a tax attorney before taking any action.


16 ASC FOCUS JANUARY 2013


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