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I have had multiple calls about how the new health-care reform act will affect us individually and small-business owners. I just finished reading the entire bill and below is brief summary:
The new health-care reform act mandates health insurance coverage for most Americans starting in 2014 or a penalty will be imposed.
The penalty will be assessed on your tax return and administered by the IRS.
Starting in 2014, the penalty will be no more than $285 per family or 1 percent of income, whichever is greater. In 2015, the cap rises to $975 or 2 percent of income. And by 2016, the penalty will go to $2,085 per family or 2.5 percent of income, whichever is greater.
The penalty assessed to an individual taxpayer for 2014, 2015 and 2016 would be $95, $325 and $625, respectively. The dollar amounts per child would be half that of adults.
The ruling mandates that small businesses with 50 or more full-time employees must start providing health insurance for all employees by 2014 or face severe penalties imposed by the IRS.
The mandate also requires all self-employed individuals to buy health insurance for themselves or pay a fine.
The fines are imposed on small businesses with at least 50 full-time employees. If they don’t start providing insurance to staff in 2014 and a single worker turns to the government for a health-care tax credit or subsidy on the health insurance exchange, the company has to pay fines. The penalty starts at $40,000, and increases by $2,000 for each additional employee past 50.
The mandate also requires that the company’s selected health insurance plan must cover at least 60 percent of health-care expenses and the cost passed on to the employees cannot exceed 9.5 percent of the employee’s salary. If the IRS deems the health-care coverage to be substandard, then the company can be hit with a penalty up to $3,000 per employee.
To help reduce the cost of health insurance, health insurance exchanges are to be established at the state level.
Hopefully, this helps everyone have a better grasp on the new health-care reform act.
Robert J. Wilson is a certified public accountant and certified information systems auditor in Indian Land.