Now that health care reform is a reality, many small business owners have concerns about how they are going to be affected by the new laws.  The same concerns hold true for employees of those small businesses.  The first thing to remember is that the majority of changes will not go into effect until the year 2014.  There are a few things, for both individual and business tax purposes, that are going to change more than once.  Here are a few of the more impactful ramifications of health care reform in the up-coming years:

SHOP Exchanges: By 2014, states will have to set up what are referred to as Small Business Health Options Programs.  SHOPs will allow small businesses (companies with no more than 100 employees) some relief over the high cost of health insurance pooling together and purchasing it as a group. The Congressional Budget Office projected that the SHOP exchanges would ease insurance costs for small businesses by 1% to 4%.  Coverage is forecast to rise by up to 3%.

Pre-SHOP Tax Credit:  Until the SHOP exchanges are implemented in 2014, businesses with 10 or fewer full-time employees earning less than $25,000 per year (on average) will be eligible for a tax credit of up to 35% of their health insurance costs.  Companies that have between 11 and 25 workers, making on average of up to 50,000 are eligible for partial credits.

This credit is not a static quantity, however, and will remain in place, increasing to 50% of costs for the first two years a company buys insurance through the SHOP.  According to CBO predictions, approximately 12% of individuals covered via the small-group insurance market which would lower their cost by about 8% to 11%.

Continue to  “Health Care Reform: Ramifications for Businesses and Individuals.”

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Disclaimer:  The information contained in this article is in no way intended for use as legal tax advice.  No assumption should be made that a tax attorney, enrolled agent or former IRS employee was involved in the creation of any content herein.  Advice on personal or business tax matters can be obtained by contacting Advanced Tax Help at (800) 970-8704, or by logging on to www.advancedtaxhelp.com