Feb 2011 , Vol. VI, No.1

Small Business Healthcare Tax Credits…And other Fun Healthcare Items

By now you are sick and tired of hearing about healthcare reform.  You’ve used up all your healthcare related talking points and jokes and desperately need new federal litigation so you can have more material for your next cocktail party.  I sympathize with that, but I would be remiss if I didn’t share some of the details of the Patient Protection and Affordable Care Act that are in effect for this year.

Small Business Tax Credit.  One such provision is the tax credit available to small businesses for providing healthcare for their employees.  The following are the rules for eligibility:

• Employer must cover at least 50% of the cost of healthcare coverage for some of its workers based on the single person rate.
• Employer must have less than the equivalent of 25 full time workers.
• The average annual wages for the employees must be below $50,000.

If your company qualifies under these criteria it is eligible for a tax credit of up to 35% of its health insurance premium costs for years 2010 through 2013 and for any two years thereafter.  This rate increases to 50% for 2014.  Employers will use new IRS Form 8941 to claim the credit.

Other Provisions Now in Effect
Medicare co-payments for certain preventative services (i.e. annual wellness visits) eliminated.
50% discount for brand name prescriptions covered by Medicare Part D when seniors reach the “doughnut hole.”
Insurance companies can no longer impose lifetime caps on certain major benefits (i.e. hospital stays).
Young adults allowed to stay on parents’ plan until they turn 26 (i.e. you will never get rid of them).
New rules prevent insurance companies from denying coverage based on preexisting conditions of children under 19.
New coverage options for adults with preexisting conditions who have been uninsured for 6 months.
One question that I am frequently asked is whether the courts will strike down the health care law altogether.  I am not a constitutional law scholar so I would not give a scholarly opinion even if space allowed.  From the publications I read, however, the smart money believes the Supreme Court will uphold the law.  Employers would be wise to continue with preparations to comply with the law, but given the political and legal uncertainties, don’t be surprised if significant changes occur midstream.

Authored by attorneys, these articles are meant to bring awareness to these topics and are not intended to be used as legal advice.

For more information, contact Mike Sterling at 757-446-8626 or Bill Franczek at 757-446-8600.
Visit www .vanblk.com, for our library of Construction Law Tips.  Suggestions for a topic? E-mail bfranczek@vanblk.com.