Continued from Health Care Reform: Ramifications for Business.

Starting in 2014, businesses with more than 50 employees will be required to offer healthcare coverage for everyone, or pay a penalty of $750 per year, per full-time worker.  The coverage offered must pay at least 60% of the employee’s health care costs overall, and meet a minimum set of benefits.  Failure to comply will result in additional penalties.

Cadillac Plans:  Insurance plans that cost more that $10,200 a year for individuals (or $27,500 a year for families), not including dental or vision coverage, will be subject to a 40% tax on the portion of the costs that exceeds the limit.  This tax levy is placed on the insurance companies themselves.

Fair-skinned taxpayers that seek out the occasional tanning salon to get their bronze on should get ready for slightly higher prices.  Tanning salons will be charged a new 10% excise tax beginning after June 30, 2010.  If you own the salon, this is certainly not good news as that 10% tax eats into the 35% tax relief that small businesses receive under the new laws.

Also, businesses will now be required to include health benefits they provide on W-2 forms (for 2011), although the amount reported is not considered taxable income by the IRS.

Currently, Employers can take a deduction for providing Medicare Part D prescription drug coverage to retirees.  To the extent the federal government subsidizes the coverage, the associated deduction will be going away beginning in 2013.

If you have a health savings account, any non-qualified distributions from that account will now result in a 20% penalty, doubling the previous amount.  This will begin in 2011.  And, coming up in 2013, the limit on the amount employees can contribute to health care flexible spending accounts will be $2500 a year.  Previously, employers were given the discretion to set the limit themselves.

Back to the Advanced Tax Help Blog

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