Health Care Reform and Your Business

2013 is here!  How will the mandates of health care reform affect your business, and what do you need to change about the way you provide health care benefits? Here are answers to some of the most commonly asked questions to help you decide.

1. What’s my deadline for complying with health care reform?

For businesses with 50 or more full-time employees, you have until 2014 to provide “adequate” and “affordable” health care coverage or face penalties. If your business employees less than 50 full-time workers, you are exempt from penalties, but you are still required to carry personal health insurance.

2. Will I be required to provide health care benefits to all employees?

You are required to provide affordable “minimum essential coverage” to workers if you have 50 or more employees working full time beginning in 2014. Failure to do so would mean paying a $2,000 “per person” penalty (although the first 30 workers are not included in that).

For part-time employees, you are not required to provide health care coverage, but remember there is a full-time equivalent of part-time workers.

3. How do I figure the full-time equivalent?

To get the FTE, determine the number of employees who work 40 or more hours weekly.  Then, add up wages paid to part-time employees, and divide the total by 2,080. The FTE is equal to the number of full-time employees and full-time equivalent part-time employees, and the total is rounded to the lowest whole.

4. Is my business eligible for small business tax credits, and when do those start?

Certain small businesses with up to 25 full-time-equivalent (FTE) workers that contribute to employees’ health insurance are eligible to get tax credits.  That began January 1, 2010. To learn more, you can visit the IRS website http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers.

5. Are health benefit costs reported on W-2 forms taxable?

Health benefit costs reported on the W-2 are not taxable.

6. Are my two companies each considered as separate employers?

Not necessarily. Check with your tax advisor if you are defined as a single employer under the “Common Control” clause found in the tax code [IRC Sections 414 (b), (c), (m), (o)]. If you’re considered as a single employer, all your full-time employees in both companies will be combined together. If the number totals 50 or more, you will have to provide affordable coverage with minimum essential benefits.