USA Today offered this recap of how health-care legislation will impact small businesses. Get the full story here.
- Tax Credit. Starting with 2010 taxes, small businesses with fewer than 25 employees that pay at least 50% of the health care premiums for their employees qualify for a tax credit up to 35% of your premiums (50% after 2014 if you purchase insurance through an exchange). How much of a credit you'll get depends on the number of employees you have and their average wage. Gotcha alert: The tax deduction is not available to sole proprietors, so you may want a different corporate legal form.
- Exchanges. Starting 2014, the biggest potential benefit may kick in with the establishment of Small Business Health Options Programs – or SHOP exchanges. These will enable small companies (up to 100 employees) to pool together to have greater buying power. Theoretically, this should result in lower premium costs.
- Subsidies. Starting 2014, many self-employed will qualify for a federal subsidy to help them afford the cost of purchasing health care. Those earning up to 400% of the poverty level will get assistance, or up to $88,200 for a family of four (at today's poverty level).
- Medicaid. Starting 2014, more lower-income individuals and childless adults would be covered by Medicaid, the federal health insurance plan for the poor. This can be a big help, especially for those just starting a business, without much income.
- Mandatory employer-provided coverage. Small businesses – with fewer than 50 employees – are exempt from mandatory requirements. Businesses with more than 50 employees will be required to provide coverage as of 2014 or pay a fine. That means those of us who provide health care coverage will no longer, in effect, be subsidizing our competitors (whose employees rely on public health services) who don't.
- Mandatory personal coverage. Also as of 2014, you'll be required to have health insurance or pay a fine. If you have to pay more than 8% of your income for the cheapest plan, you're not penalized.
- Pre-existing conditions. Starting June 2010, individuals who have not been able to get insurance because of pre-existing conditions can join a high risk insurance pool. As of 2014, insurance companies can not deny insurance to adults based on pre-existing conditions.
- Adult children. Starting in September 2010, dependent children up to age 26 can be covered on parent's policy.
- Lifetime limits. Starting September 2010, there can be no lifetime maximum limits on policies. Also, companies can not rescind policies except for fraud.
- Preventive care. Starting September 2010, coverage must include basic preventive care. As many small businesses can now only afford catastrophic coverage, this may mean additional benefits.
- Taxes. Starting January 2013, if you make over $200,000 (individual) or $250,00 (family), your Medicare tax rate will increase from 1.45% to 2.35%. A bigger potential tax bite may hit small business owners who receive capital gains, dividend, or interest income with an additional 3.8% tax on that income.
- “Cadillac” plans. Starting 2018, employers who provide insurance costing more than $10,200 for individuals or $27,500 per family must pay a 40% tax on the excess cost of the premium. This could be a big burden on small businesses, as many premiums are already at that rate for even basic coverage.