Do You Qualify for a Medical Coverage Tax Break?
December 2010
There's been a lot of conflicting information out there regarding the new healthcare bill and small business health insurance. Will it save business owners money? Will it cost more? Will
medical coverage be more affordable?
The answer, according to Business News Daily, depends on exactly how small your small business really is.
For example, if you employ 25 or fewer employees, and if their average income is $50,000 or less, you could stand to save a lot of money on tax breaks for medical coverage. You can get up to 35% of costs back.
But the catch is that you have to pay more than half of the premiums charged for your employees. If you don't pay more than half, you don't qualify for the rebate. If you do offer
small business health insurance to your workers, speak to an accountant about whether or not you qualify. The calculations are confusing, but if you qualify you can save a lot of money.
What about insuring dependents? Many employers are concerned that they'll be hit hard by new rules requiring that dependents can be covered by their parents' plan until age 26. However, if the dependent in question has access to some form of medical coverage from school or through a job then insurance companies (and therefore employers) can refuse to cover them until 2014.
Next year another set of rules comes into play for small business health insurance, including changes required of health insurance companies that could make insurance cost more. For example, insurance companies will no longer be allowed to cap lifetime benefits for some services, they can't rescind coverage based on fraud, and they can't deny children coverage based on pre-existing conditions.
Facts on:
Small Business Health Insurance
Did you know...
Some small businesses could get 35% back on medical coverage costs.
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While all of this goes a long way in offering better coverage for consumers, employers who foot part of the bill are worried that their costs will go up. Here is another reason to look into tax incentives - smaller businesses will get more back for these costs than larger ones.
If the
healthcare bill goes unchallenged, or if key parts of the bill remain intact, changes in 1099 reporting will be coming in 2012 and by 2014 an entirely new system of health insurance will be in place. By then small business owners will theoretically be able to shop for coverage on the state-run insurance exchanges designed to offer them coverage at lower prices.
However, whether or not this will ever come to pass is up in the air. For now it's best to leave your finances and insurance questions to a good accountant, who should be able to steer you in the best - and most affordable - direction.
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