The time for small business owners to start preparing for the changes coming under health care reform is right now, according to a financial planner. Actions taken today could save money down the road.
Under the new law, starting in 2014, deductibles for group health plans can't be higher than $2,000 for individuals and $4,000 for families.
But, said Rick Kahler, president of Kahler Financial Group, it is quite likely existing policies with higher deductibles will be grandfathered. He suggested business owner consider implementing a high-deductible plan now in order to keep their future premiums affordable.
In addition, those companies with 10 or fewer employees and annual average wages under $25,000 will be eligible for a tax credit of 35% of their annual health insurance premium costs. But the amount of the tax credit decreases based on the number of employees above 10 and of those whose wages exceed $25,000.
Those who have over 50 employees are required to offer "adequate coverage" or they could be subject to a penalty of $2,000 per employee (no fine for the first 30 employees, however). Part-timers do count towards the number but owners and family members don't.
"Strategies business owners could pursue to stay within those minimum employees, wage requirements might include spin off companies to non-controlled or affiliated groups, reduce employee count, or outsource work," Kahler suggests. "But, these actions could take a few years to implement, so even though some health care bill provisions don't start until 2014, start to explore these options now."
He expects insurance costs to continue to increase in the near term. To offset these, Kahler suggests companies eliminate insurance programs for "extras" like dental and eyeglasses. For closely held C corporations, a medical reimbursement plan may allow businesses to write off all qualifying non-deductible expenses without being subject to health spending account and flexible spending account plan caps.
"Perhaps the most important strategy is for business owners to pay close attention as the law is implemented so they can manage the health of both their businesses and employees," Kahler said.
