Many people are asking about the Affordable Care Act (also referred to as ObamaCare) and the requirements that are taking effect now and in the near future. Much of our new literature, tax articles, continuing education, and discussions this year are revolving around the implications of the bill for small businesses and individual taxpayers. Recently, the requirement for employers with more than 50 full-time employees to provide health insurance was delayed. However, none of the other requirements have been affected at the time of this post leaving many changes forthcoming.
Recent calls to Blue Cross Blue Shield of Kansas indicate that premium increases for 2014 won’t be communicated until October or November. The online Marketplaces are still being developed, but scheduled to open on October 1st. Insurance companies are still trying to be approved for the Marketplace. With all these moving parts, it is hard to pin down the effect that the new regulations will have on each of us. Stay tuned………..
Many taxpayers who currently purchase individual policies and those who do not have insurance may be getting large tax credits to assist in paying their premiums. The tax credits are dependent on household income, household size, and the requirement to purchase your insurance through the Marketplace. Based on the 2013 poverty levels, a family of four may qualify for premium assistance if their household income is $89,000 or less (very small premium assistance at the $89,000 level to complete assistance at the $32,500 level for a family of four). We believe many families will qualify for this credit which can be used directly with the insurance company or refunded when you file your 2014 taxes.
A few of the dates that may affect you or your business are as follows (NOT all-inclusive):
January 1, 2013 – New Medicare tax of .9% on all wages paid in excess of $200,000
January 1, 2013 – New unearned income surtax of 3.8% on high income individuals
July 31, 2013 – Requirement to file form 720 for small businesses who offer a Heath Reimbursement Account to their employees (this includes most of our BASE 105 clients)
October 1, 2013 – Requirement to distribute Marketplace information to all employees and all future employees (see the form in our “Sharp Library”)
October 1, 2013 – Online Marketplace opens
January 1, 2014 – Requirement for all individuals (with certain exemptions) to have health insurance or pay a penalty
January 1, 2014 – Maximum waiting period to enroll employees in group coverage is 90 days
As with any tax law, proper planning can have an effect on your tax bill and/or refunds. There are many potential strategies to maximize your premium assistance credit if your family is within range of the poverty thresholds. It is important to note that household income is offset by business losses, deductible student loan interest paid, and deductible contributions to a traditional IRA among other things. As always, we are available to assist you with your tax planning needs.