The Big Picture - October 2012 - (Page 18)

business ++ management business management A ordable Health Care And Taxes By Mark E. Battersby W hether you agree with the decision or not, the US Supreme Court has ruled and the “A ordable Care Act” (ACA) is now the law of the land – and the Tax Code. Soon, every individual must have health insurance or face a tax penalty. Print service providers and other businesses must o er their employees health insurance or face penalties. Not quite hitting home as of yet is the full impact the ACA’s 20-plus tax adjustments will have, not only on print providers, but on all businesses, their owners, the selfemployed, and every individual. Some of the new taxes and credits are already in play. The employer mandate The tax most likely to a ect print shops – at least those with more than 50 employees – is the “employer mandate.” Under ACA, businesses with more than 50 employees are required to provide employees with health insurance or face an “assessable payment.” That means a business must be in compliance or face the ﬁne beginning after December 31, 2013. Already on the books is the Small Employer Health Insurance Tax Credit. Employers with fewer than 25 employees can enjoy a tax credit (a direct reduction of the tax bill, as opposed to a deduction that reduces the income upon which the tax bill is computed) of as much as 35 percent of the health-insurance premiums they pay for employees. To take advantage of this credit, however, the average annual wages of a shop’s fulltime (“fulltime-equivalent”) employees must be less than $50,000. And, it’s important to note that only those digital print operations that have fewer than 10 fulltime-equivalent employees and average salaries of $25,000 or less are eligible for the full credit. That full credit is 35 percent of the employer’s contribution toward an employee’s insurance premium. As the size of the business and the average wage amount goes up, though, the tax credit goes down. Once the business hits 25 fulltime-equivalent employees or $50,000 in average salaries, the credit is completely phased out. This tax credit is scheduled to increase to 50 percent for small-business employers after 2013. After 2013, smallbusiness employers will be required to participate in an insurance exchange in order to claim the credit. Already in e ect, the Small Employer Health Insurance Tax Credit appears to be under-utilized. The Government Accountability O ce (GAO) recently reported that only 176,300 of the 1.4 to 4 million small businesses eligible actually claimed the credit in 2010. The individual mandate The impact for sole proprietors and others with no employees will be much like the impact on individuals. For people in this group, the crux of the 2014 rollout is the individual mandate, which requires all US citizens and legal residents to have health coverage or pay a penalty. There are some exemptions, however, such as those from certain religious backgrounds and those who are eligible for the so-called “hardship exemption” if the cost of the annual premium exceeds 8 percent of household income. Penalties have been established to ensure compliance. Once fully phased in, the maximum penalty for individuals for not having insurance is $695 or 2.5 percent of income – whichever is greater. MARK E. BATTERSBY is a freelance writer who has specialized in taxes and ﬁnance for the last 25 years. He currently writes for publications in a variety of ﬁelds, syndicates two weekly columns that appear in more than 65 publications, and has written four books. Minimal qualiﬁed insurance Regardless of size, no print shop can purchase just any insurance to avoid the penalties. The operation must provide “minimum essential” and “a ordable” coverage. “Minimum essential” coverage means covering 60 percent of the actuarial value of the cost of the beneﬁts. And “a ordable” means the premium for the coverage of the individual employee cannot exceed 9.5 percent of the >55 18 THE BIG PICTURE OCTOBER 2012

Table of Contents for the Digital Edition of The Big Picture - October 2012

The Big Picture - October 2012
Contents
InSight
Wide Angle
UpFront
Inside Output
Business + Management
Industry Roundtable: Foreseeing a Road to Success
Remote Output
Outdoor Evolution
A Specialty Media Solution
R+D
Job Log

The Big Picture - October 2012