What Healthcare Reform Means for You

President Obama recently signed historic legislation to make healthcare available and affordable to millions of Americans. Here�s how the new law could affect you.

Under the new healthcare system, firms with fewer than 50 employees will not face penalties if they don’t offer health insurance coverage. But those that offer coverage will receive a tax credit up to 35% of employee premiums to offset insurance costs this year.

A number of business owners have been seeking such relief. Carla Walker-Miller, CEO of Detroit-based Walker-Miller Energy Services L.L.C., is among them. Her firm, which supplies electrical equipment and energy optimization services, employs five full-time workers and generates about $4 million in annual revenues. Since its inception a decade ago, Walker-Miller Energy Services has offered health coverage, while dental and vision plans are optional. Currently, the company covers 80% of employee health premiums, so gaining a reimbursement has great appeal. “It will encourage other businesses that aren’t providing health insurance to at least provide partial coverage,” says Walker-Miller, who until the end of 2009 provided 100% healthcare coverage to her employees. “I changed to employees covering 20% of insurance costs because the cost was getting so unmanageable.” Right now, she pays about $500 a month for single workers and $1,300 a month for those with family plans.

Coverage Provisions

There is no health insurance requirement for business owners with fewer than 50 employees. Firms with 50 workers or more, however, must offer insurance to employees or pay a fine.  Part-timers are counted in the number of employees based on hours and wages, which means 50 part-time workers would be the same as 25 full-time workers.

Penalties for Non-coverage
If a company does not provide health coverage, the penalty is $2,000 per one full-time employee after the first 30. Even if you offer insurance but one or more workers receive government subsidies to buy health insurance, you still have to pay the penalty.  Some CEOs would rather pay the $2,000 per employee penalty than offer health insurance to their workers because it would be cheaper, maintains Molly Brogan, a spokeswoman for the National Small Business Association, a trade  group based in Washington D.C.

Tax Credit
About 4 million small businesses will be eligible to receive tax credits if they provide insurance. If you cover at least 50% of group healthcare coverage for your workers, pay average annual wages below $50,000, and have fewer than 25 full-time employees, you qualify to get back as much as 35% of the total premiums your business pays; 25% if you are a nonprofit. In 2014, the value of the credit will increase to 50% and 35%, respectively. Firms will be able to claim the tax credit up to six years.

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