Is your Business Ready for Obamacare?

The election is over, the dust is settling and out of the fog comes the realization that “Obamacare” or the Affordable Health Care Act will move forward. So what do you as a business owner need to know and what do you need to prepare for, going into 2013?

  • Additional Medicare Tax: There will be an increase of 0.9% on the employee portion of the hospital insurance tax portion of FICA for wage earners who earn above a threshold amount for tax years beginning after 12/31/2012.  The threshold for joint returns or surviving spouse is $250,000. For a married individual filing separately, it is $125,000, and for any other filer, the threshold is $200,000.
  • Medicare Tax on Unearned Income: Individuals making $200,000 or joint filers making $250,000 will pay an additional 3.8% Medicare payroll tax in unearned income. Excluded from the increased tax is Interest on tax-free bonds veteran benefits, and gain from the sale of a principal residence that are excluded from gross income are not considered net investment income for purposes of the additional tax, nor are qualified retirement plan and IRA contributions.
  • Flexible Spending Account Contribution Limits: The contributions to Flexible Spending Accounts cannot exceed $2,500 per year.  After December 31, 2013, the amount will increase.
  • Employer Retiree Subsidy: In 2013, Employers will no longer be able to receive a subsidy to and also claim tax deduction for providing prescription coverage to retirees. Instead the amount the Employer is able to deduct will be reduced by the amount of the federal subsidy received.
  • State Based Insurance Exchange: State health exchanges will be set up to facilitate the purchase of qualified health plans  and provide for a Small Business Health Options Program  to assist small employers in enrolling their employees in qualified plans. Beginning in 2017, states may allow employers of any size to offer coverage through an exchange.
  • Notice of Exchange: By March 1, 2013, employers will be required to provide all new hires and current employees written notice about the state health benefit exchanges and the consequences if an employee decides to purchase a qualified health plan through one in lieu of employer-sponsored coverage.
  • W-2 reporting: Tax form W-2s issued in January 2013 for wages paid in 2012 must for the first time include a line showing the benefit employees receive from their employer-sponsored health care. The provision is an attempt to make health-care benefits and spending more transparent.

For more information and guidance see www.healthcare.gov/law. There you can read the full text of the law, view a timeline and find other helpful resources.

Author: Jennifer Trowbridge, Stoecklein Law Group, LLP

This entry was posted in Affordable Health Care Act, Legislation, Small Business Management and tagged , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s