Despite the heated politics, business owners need to have an understanding of President Obama's $940 billion health care plan. So, I've talked with various experts on the matter.
And while things are far from set, there are some general things to consider.
Small Business Health Options Programs (SHOP Exchanges). Each state will need one by 2014. Basically, a SHOP exchange allows for purchasing pools for small businesses. In other words, this should allow for more leverage. In fact, there will also be various tax credits to encourage participation (for the first two years).
Of course, it's far from clear how much this may lower costs. Keep in mind that, by the time SHOPs hit the market, insurance premiums may have already increased significantly. After all, carriers will need to find ways to make up for the removal of benefit caps as well as expanded coverage.
Subsidies and Medicaid. "By 2014, many self-employed will qualify for a federal subsidy to help them afford the cost of purchasing health care," said Sam Gibbs, who is the senior vice president at eHealthInsurance.com. "Those earning up to 400% of the poverty level will get assistance, or up to $88,200 for a family of four."
As for Medicaid, more lower-income people will be covered by Medicaid by 2014. This could be a big help to those starting a business because their earnings are likely to be lower.
Penalties. If your company has more than 50 full-time employees, then there will be a penalty if one or more full-time employees get a government subsidy for health insurance. The penalty is $2,000 per employee, which comes into effect in 2014.
Interestingly enough, this provision could incentivize businesses to stop hiring, especially as the headcount approaches 50. Or, it could mean an increase in layoffs.
Tax Break. "A small company may be eligible for a tax credit of up to 35% of the amount contributed to an employee's health insurance premiums," said Bob Meighan, a vice president at Intuit's (INTU) TurboTax. "This starts later this year." But of course, there are some hitches. For example, you must provide coverage for at least half the premium cost for employees. Next, you need to offer a group policy.
Finally, you get the the whole 35% credit if the average employee earns $25,000 and there are fewer than ten employees. From there, a sliding scale applies up to 25 employees.
Higher Taxes. Somehow, there will be a need to pay for the health care benefits, and this means new taxes. To this end, the law will inact a payroll tax for those single people earning more than $200,000 and families that earn more than $250,000. But the good news is that owners of small businesses are exempt.
"Cadillac" Insurance Plans. By 2018, there will be a 40% tax on the excess cost of premiums for insurance costing more than $10,200 for individuals or $27,500 per family. This could have a major impact on firms that have high-paid employees, such as law firms.
Tom Taulli advises on business tax preparation and is also the author of a variety of books, including The Complete M&A Handbook. His website is at Taulli.com.
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Reader Comments (Page 1 of 4)
4-04-2010 @ 7:35PM
Randy said...
Obama he is my man, he show his anger, he gives no dam.
He is a progressive in every way, killing jobs is how he earns the union's back deal pay, in action he is a socialist even when he is just issuing a simple stay: he says he for the free, but he is bent on a single deed, providing a permitted May Day for us to see.
He oppresses many while calling them every name, then claiming he and his party is the victim to gain more fame, he is very hypocritical in the blame, knowing every time it's the same, this is his Obama's favorite game.
He is for big government every time, hurting our economy so we can't save a dime. He knows big government's role, will take away all of our dough. He made a promise not increase the deficit, this promise was know, to be untrue, but if he created enough civil unrest, he could find some else to have the all the blame rest, so it's prove it's not his fault for the ugly mess.
With government spending billions in waste, I know our government will make it sound great like it's a honorable place, so they can feed more money to their own cronies in every case.
President Obama helps unions gain their dues, no bill is done with out their un-ethical sausage dew. Soon our education system stench will protrude.
He blame's others like the Tea Party, Insurance, Big banks, and Israel. Many of us knows he's already failed. He shows the signed of being a dangerously narcissistic, but our media loves him, as he can fool them to believe, he just being pessimistic.
Go Obama, lets have Government take away more freedoms, come on man, you can transform us to angry, nanny state.
4-05-2010 @ 7:06AM
Jim said...
President Barack Obama will go down in history as one of the greatest presidents.
Thank God he's turning around Ronald Reagan's voodo madness which got us to our present position.
Once this thing he's designed kick's with success; we might not see a conservative in power in my life time and I say thank the lord.
4-05-2010 @ 7:14AM
Frank said...
if this bill is such a God send then why does obummer have to sell it to the American people. all obummer has done is lie, lie lie. for instance children with pre-existing conditions will be covered immediately. after the bill was signed it was announced these kids would not be covered until 2014. if obummers mouth is moving hes lieieng. Americans hve to pay taxes for this debacle now but arent covered until 2014. would you buy a car pay for it now and take delivery in 2014? all this "president" wants to do is put his marxist/communist ideological oppressive theories to work to make Americans poor and completely ignore the "will of the people" and the constitution. JOIN GRASSFIRE.ORG
4-05-2010 @ 7:15AM
Frank said...
one more thing....Jim cant find his butt with both hands...what a dope
4-05-2010 @ 7:23AM
joyceches said...
The way things are going, he might be the "Last" president of the "57" United States of America!
4-05-2010 @ 7:30AM
Jeff said...
Let's see here, If I don,t have insurance I pay a fine. If I don't have enough insurance I pay a fine. If I have too much insurance I pay a 40% fine. That sound right? It it not about quality health care.
4-05-2010 @ 8:28AM
Dan said...
Jim must be one of those unemployed couch potatoes us working people pay to support. Fact: majority of American people feel Obama is probably ineligible to legally be president. Fact: CBO ( Congressional budget office ) figures indicate the true cost of Healthcare not at 980 billion but 2.4 TRILLION. Enough to bankrupt our country. Fact:Contrary to what the white house says national unemployment is at approximately 24% and continues to rise. And this from a guy who admits he's Muslim not American, admits he has attended anti-American flag burning ceremonies, admits his wife hates America and the American flag, publicly states that America DESERVES terrorist attacks because we instigate his poor terrorist allies, bows to an arab king but refuses to acknowledge the pledge of Allegiance. The REAL question is Why have we the American people not thrown this bum and his corrupt Congress out in the street already.
4-05-2010 @ 9:39AM
edusfh said...
Just like it takes the humble and common man to labour and suffer and make a difference in this world so it is with President B Obama; who have not forgotten his root, his not like the status quo but choose to differentiate himself with superior performance. When everyone said it can be done he believed and said yes it can and it is done. He has joined the ordinary that do extra ordinary things. President B Obama God bless you continually all of days for as you do to the least of these your become the extended hand of God Himself and also the complete expression of his love in Jesus name Amen.
4-05-2010 @ 8:07AM
Tom said...
This just kills my business. My contracts usually extend out 3-5 years. How am I supposed to construct a budget? How do I know what I am going to get stuck with 2 years from now? I only employ 5 people but we were just expanding some of what we do from healthcare to pharma. And there is no way that I'm going to enter into a contract with someone when I don't know what my costs will be. I have a 5-7 percent profit margin on the work that I do. I can not run leaner than that.
At my age, I'm going to coast for the next five years and then hang it up, rather than build. Its just not worth it.
4-05-2010 @ 8:20AM
Tom said...
I believe President Obama is doing the right thing, we can be all we can for everyone around the world, why not take care of home first. If 53% of Americans voted for the President and he said what his adjenda was, why is it a surprise? Also I would have preferred to see the Republicans come up with a plan instead of Just say No. If the Democrat's believe that by standing on the sideline they will be surprised, since the would be blamed for not supporting their own. Overall, I am glad to see something being done.
4-05-2010 @ 9:21AM
Walter said...
I was wrong to think that Obama was all about marching this once great nation to Marxism. I see now he is hell bent on marching the country to ruination, bypassing Marxism altogether. Fortunately, Obamacare will kill me before the hammar and sickle falls off the Washington Kremlin.
4-05-2010 @ 9:52AM
bub said...
Obama was hand picked for the presidency by the trilateral commission. If you want to watch a great Youtube video about the trilateral commission and Obama the site is: http://www.youtube.com/watch?v=cMicaeRSwUY&feature=PlayList&p=EE9815C1CAFFC749&playnext_from=PL&index=0&playnext=1 watch all six parts. Wake up people, it's not about republicans or democrats, it's about the take over of power leading us to "the new world order".
4-05-2010 @ 9:32AM
Clay Gunter said...
Now that its been passed, all those lies and BS that the GOP Goobernation has spewed out are gone! No death panels! No Gov. funding for abortion(even without Stupaks personal signature from the president!), As more and more Americans are starting to settle down and realize we're moving in the right direction after all! Funny how the GOP didn't tell everyone that the American Medical Association had already approved Obamas plan. When the group representing the doctors in our country says its OK? Then maybe we should look at it closer also! The reason we're low on the number of doctors is simply because the high cost of liability insurance for doctors is so horrendous, many in universities go another direction instead of becoming doctors! This has been going on for years now!
4-14-2010 @ 11:11AM
BHarrison said...
Have the vast majority of the American people become so toatlly ignorant that they don't understand that government programs like this NHC will become exorbitantly expensive, corrupted, and WILL result in lower quality and extent of healthcare? Within 5 to 10 years this NHC program is going to increase the personal income tax raes by AT LEAST 10%, if not more. And by then, like all of the other socialized medicine countries, there will be waiting lists, and sextesnive qualifications / approvals required for major medical procedures. Advancements in the medical industry will be slowed due to government regulations and controls.Government simply does NOT know how to function efficiently or effectively. The system will soon be rampant with fraud, the same as Medicare and Medicaid had become. Just look at what the government HASN'T been able to do for the New Orleans hurricane disaster recovery ... N.O. is still a devastated area. NHC is not going to be any better. People buy-in to the cconcept of these programs without realizing or paying attention to the government's history of how horrible government palns are. We're giving up her personal freedoms and personal choices for an ILLUSION of something that will NEVER MATERIALIZE. That is a guaranteed FACT. People buy-in to the "FREEBIES and the illusion that everyone is going to get halthcare ... but at what costs in higher taxes and by lowering the quality of medical care. If you don't believe this, then just look at the history of the U.S. and state programs that have ALL turned out to be fiscal disasters.
4-05-2010 @ 10:22AM
genius said...
The Healthcare Reform is a huge mistake on so many levels. I am a genius, therefore I know this for a fact.
4-07-2010 @ 2:42AM
ROBBY53 said...
OBAMA HAS TO GET RID OF THE EGO TRIP--HE IS BORING AND NO ONE BELIEVES HIM OR TRUSTS WHAT HE IS SAYING, WE DO NOT NEED OR WANT TO SEE HIM ON TV 3 TIMES A DAY EITHER..THE PARTY IS LONG BUT OVER FOR HIM AND THIS GUY NEEDS TO GO...HE IS BY FAR THE WORSE PRESIDENT THIS COUNTRY HAS EVER SEEN.. AND IT WILL JUST GET WORSE UNTIL NOVEMEBER..HE IS OUT IN 2012.
4-05-2010 @ 11:04AM
Adam Smith said...
BIDEN IN 2011
4-05-2010 @ 11:49AM
twoshort2000 said...
Obama, is an *** and that is putting it mildly lol i wonder where he gets his math skills really think about this rany i read ur first comment " he's your man" lol what a joke i want you to think about this ok if 10 million were breaking the country what Common sence tells you to take on 30-40 more million that is NO more then STUPIDITY! really he says things that he can't hold hold to the people of america are fed up with him, and NANCY POLISe he was againist drilling for oil in the states , he claimed he would not raise taxes lol which is a joke, where do u think the money is gonna come from , he also spent more then any president in history in the first quater, you can't beive any thing the says says and when the people of america speak out you think he would listen lol not this guy i can only hope he gets impeached! he is destorying our country! and think about this randy and who ever wants to back up the idiot in the white house lol if health care was so freaking wonder in eroupe then why is every one coming here for medical reason? think about it i can tell you cause it is not so wonderful and it is not so good! we are alll doomed!
4-05-2010 @ 12:08PM
jim said...
You think its great, but do not knwn why.....Welcome to liberal land.....Student loand only 10% of income??? It was only 15%, so a $300 per month loan is now $15.00 less per month.....That is a big Fing deal!!! Jr. can get a whole McDonald's combo meal with what he saves.
Companies now get a 35% tax break to fund health care.. It was 31%... Now That is a big fing deal 4 whole percent!!!!
Lower our deficit, sure since we get to pay for this poop for 4 years before we see any benefit. What happens in 2020 when we actually have 10 years worth of benefits to pay for.. another big fing deal......
And lets do something for those that owe more than their house is worth....after all they were tortured into signing the mortgage papers, and what the hell does it matter. Would you expect the bank to INCREASE your monthly payment had the home INCREASED in value????
4-05-2010 @ 12:12PM
Kitty said...
Obama's incompetence and socialist leaning agenda will put thousands of small business OUT OF BUSINESS or force them to fire employees when they cannot afford to offer insurance to employees.