How do the new healthcare laws affect small businesses? If you’re an entreprenneur, you might want to sit up and listen, although many of these changes to federal income tax law might not take effect until a much later date.
The Obama Administration is tying to make it easier for small businesses to afford healthcare. While I could discuss the new healthcare laws in general, it’s a huge topic and it goes well beyond the scope of this blog, which essentially deals only with issues of personal finance and small business issues.
The law is being implemented using a process called budget reconciliation. Budget reconciliation laws deal largely with money and finance, since the reconciliation process is a budgetary thing.
As a result, the Internal Revenue Code stands to be affected. But how?
Penalties for large employers, if offering inadequate coverage. Starting January 1, 2014, employers who have at least 50 full time employees within the preceding calendar year will have to abide by certain requirements regarding offering healthcare to their employees.
Small Businesses that make contributions will get a tax credit. This credit will be phased in from the 2010 tax year up until the 2013 tax year. A tax credit, for the uninitiated, means that you will have a direct tax write-off, dollar for dollar, for a percentage of those amounts.
IRS requires more accountability and reporting. Depending on how the healthcare is offered, the employer will have to report to the IRS on the health insurance offered to employees. Thus, if an employer self-insures , several details, as outlined by the new law, must be reported to the IRS. These requirements will become effective post-2013.
There’s a lot more to the new healthcare laws, which will be implemented over time. The issues mentioned in this post only scratch the surface. Have a look at the related resources or at my FindLaw post on this topic.
- What is Reconciliation, Anyway? (LawSavvy)
- Health Care Coverage Under COBRA (JobSavvy)
- The Economic Effect of Health Care Reform on Small Businesses and their Employees (White House)
- Health Care Reform Reshapes Tax Code (Journal of Accountancy)