Category Archives: Legal Issues


Individual Mandate Clarifications For Small Business

Health-care-reform5The IRS has finally taken one more step to clarify what will constitute the Individual Mandate provision of the Affordable Care Act. The mandate, which requires all Americans to obtain health insurance, had gone mostly undefined until now. As we approach the 30 day mark to the opening of the “online marketplace” also known as exchanges and the 100 day mark of Obamacare Implementation, American consumers and small businesses now have a clearer picture as to what will be required on January 1, 2014.

  1. First, the penalty has been “remarketed” as a shared responsibility payment. This still requires those that do not qualify for an exemption or tax subsidies based on income, to obtain health insurance that meets minimum essential coverage.
  2. “Minimum essential coverage” is broadens the definition of employer sponsored plans to include multiemployer plans, single employer collectively bargained plans, plans sponsored by third parties such as professional employer organizations, temporary staffing agency, etc.
  3. One of the big coverages that were not identified in the ruling by the IRS is how some funding arrangements will be considered. Standalone Health Reimbursement Accounts, which are a common funding option to allow employees to purchase their own health insurance in the open market, have not yet been addressed.
  4. Penalty exemptions have also been clarified to in an effort to make it easier for lower income individuals to understand how the subsidies work, and what is needed to claim them. Some changes include:
    • A taxpayer is not required to file a federal income tax return solely to claim the exemption, and may apply for exemption via the Exchange/Marketplace
    • Individuals who have a gap in minimum essential coverage of less than three consecutive months in a calendar year, with the continuous period beginning no earlier than January 1, 2014
  5. How will the penalties be paid? – Penalties are to be paid to the IRS through the filing of tax returns starting in 2015. A penalty is the greater of either a specified dollar amount or percentage of income. The annual penalties for 2014 through 2016 are noted below. Beginning in 2017, penalties will increase based on the cost of living.
    • 2014: Greater of $95 per adult and $47.50 per child under age 18, maximum of $285 per family, or 1% of income over the tax-filing threshold
    • 2015: Greater of $325 per adult and $162.50 per child under age 18, maximum of $975 per family, or 2% over the tax-filing threshold
    • 2016: Greater of $695 per adult and $347.50 per child under age 18, maximum of $2,085 per family, or 2.5% over the tax-filing threshold

Fully Enacted Healthcare Reform – What to Expect

Health care reform5As the full enactment of Obamacare approaches, there are many factors that business owners know to look out for.

  • Do I need to provide health insurance to my employees?
  • Should I go to an exchange?
  • How will the mandate impact my business and profitability?
  • How much are my health insurance premiums going to go up?

These are all questions that many business owners are starting to look. Below are some points that you may not have thought of that should go into your business planning.

We all know that health insurance premiums are expected to go up, but do you know how much? Small groups (2-99 employees) can expect to see price increases between 20% and 50% upon the full enactment of reform. When factoring in medical trend, taxes and fees, carrier and product changes and the introduction of community rating, your premiums will jump significantly. As a small business owner, asking your existing broker for a quote is not going to solve this problem as it will require a new method behind providing employees with health insurance. The objective of a health insurance plan should not be to carry you over to the next year with as little pain as possible, but to address your company’s healthcare expenses for the long term. You need a road map that will allow you to offer affordable coverage to employees while keeping costs in line.

Some employers are looking to drop plans in order to remain profitable. Unfortunately, this is not the answer either and can cause more pain than gain. With the Supreme Court upholding the individual mandate, all Americans will be required to obtain health insurance or pay a penalty. The cost of obtaining coverage for individuals is expected to jump 100% – 200% with an average increase of 116%. This is going to push many employees who either have individual plans or would ordinarily look at obtaining individual plans to go to their employer to obtain coverage. By not obtaining small group coverage, you risk losing your talent to other companies who are willing to absorb the cost. This can result in the loss of business and inevitably impact the bottom line more then not offering coverage at all.

The federal funding for health care reform is already facing challenges that will impact all small business owners. In the deal that was reached in the fiscal cliff debate, an agreement was made to cut the remaining $1.9 billion dollars that was set to fund Consumer Oriented Operated Plans (CO-OP’s) through the Affordable Care Act. $1.9 billion was already spent to fund the creation of CO-OP’s. These will remain in place; however no more federal money will be used to create any additional CO-OP’s at this time. This is another example of where the Obamacare bill has been modified in order to maintain its functionality. This will lead to higher costs in term of premium and taxes for small business owners and individuals seeking health insurance in the short term, to cover the high costs of implementing the systems and covering up all other budget shortfalls that would have ordinarily paid for these costs.

The Small Business Authority is here to answer any related questions you may have. Please contact us either by commenting below, tweeting us directly@The_SBA or sending an email to info@thesba.com.

 

Am I Required To Offer Employee Health Coverage?

Employee benefitsIf you have less than 50 employees:

  • Will not be required to offer a company health plan
  • Employees will still be required to purchase insurance
  • Individual premiums can jump 100%+
  • Small group pricing is expected to jump about 20% – 50%
  • Obamacare will create a competitive advantage issue for a lot of smaller companies who may risk losing employees to companies that can provide benefits
  • Changes in health insurance options may have an impact on your property and casualty insurance policies, and should be reviewed to address of all of your risk.

Over 50 employees:

  • Will be required to offer benefits
  • Not all states will have full exchange capabilities
  • Common ownership will be enforced, which means that companies that break employees up into different LLC’s will still be required to offer benefits
  • Small group pricing is expected to jump about 20% – 50%

What does this mean for me?

As a business owner, you need to understand your current health insurance program, and make sure that all benefits are being administered as efficiently and effectively as possible. By integrating your processes (payroll, employee benefits and commercial insurance) you have the ability to streamline the underwriting and administration process, while ensuring the best price and coverage.

Questions? Concerns?

Leave a comment here or call Newtek Insurance Agency at 855-2thesba to review your options, compare your pricing, and determine the option that is best for your business.

Obamacare Employer Mandate Delayed Until 2015

news-delayed-1211pgOur recent blogs and Small Business Authority Market Sentiment Survey have depicted a sense of uncertainty and lack of clarity amongst business owners as to what to do to prepare for the PPAHCA. This uncertainty has continued to exist with a persistent stubbornness. The administration, in its wisdom, has delayed a key provision in ObamaCare, the “Employer Mandate.” Allbusinesses with over 50 employees must provide health insurance to their staff  or face fines up to $3,000 per employee.

The consumer mandate, which Chief Justice Roberts refers to as a tax, is not delaying its start date of 2015, so individuals not covered under an employer plan must obtain health coverage or face fines beginning in 2014. This announcement came yesterday from the Treasury Department, right before the July 4th holiday is to begin for many businesses and Americans.

Our clients, small independent business owners, could argue the merits of the PPACA ad nauseum, but could not really argue the concern over the rush to implement it quickly. As Nancy Pelosi once said, you have to “pass the act to know what’s in it.” This message and confusion has created great pushback by taxpayers, citizens and even government administrators, who know that this 2000+ page act requires a huge cost and administrative burden to implement and manage. Rules are being perpetually rewritten and updated and a January 2014 start date for employers was just unrealistic.

Now, with the consumer mandate still out there, does this shift an economic burden to uninsured workers or consumers for a year? Or just expand our deficit further? Both? Probably both.

The benefits of ObamaCare, such as insuring all, even those with pre-existing conditions, still are on track for January of 2014. Exchanges are planning on being launched on or before January 2015. Most of the act, so far, is in motion. Our clientele still fears government becoming larger in many areas, including healthcare. Our clientele still fears an ever-expanding deficit. Our clientele is also happy that this provision is getting delayed so that they will have more time to plan and make wiser choices given the new uncertainty and changes being brought in by the act.

Newtek Lending a Hand in Sandy Recovery

At Newtek, The Small Business Authority, we just announced several special programs to help small businesses devastated by Hurricane Sandy. Newtek Chairman and CEO Barry Sloane says, “We are here to help small businesses and even moreso, any individuals affected by Hurricane Sandy’s devastation. Newtek, “The Small Business Authority” helps independent business owners in good times and bad, both our clients as well as others. We are a business located in both Manhattan and Long Island and clearly understand the problems these local businesses face. We are here every day, around-the-clock to help with all major causes of concern for small businesses.”

Mr. Sloane offers, “All it takes is a phone call to the 1-855-2-THESBA phone line for help with:

* SBA Disaster Loan Funding

Examining Insurance Policies for wind, flood, and business interruption coverage.

Data Back-up Planning

Cloud Computing Solutions for immediate cost-savings and future disaster protection.

Additionally, it is important to know that The United States has declared several states (and many counties within them) Federal disaster areas. These include areas within Connecticut, Delaware, District of Columbia, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, and West Virginia.

Newtek understands both individuals as well as small business leaders have myriad assistance questions. Answers may be found at FEMA, U.S. Department of Homeland Security’s Website. Assistance can include grants for temporary housing, home repairs, and other programs to help individuals and business owners recover from the Hurricane Sandy disaster. Moreover, this site also provides helpful programs for medical and other serious disaster-related needs not covered by insurance.

U.S. Small Business Administration (SBA) Disaster Loans are available for businesses located in affected counties and States which include loans up to $2MM for certain property losses and/or fiscal damage.

Business owners’ first step should be to register the affected business by calling 1-800-621-FEMA(3362) or by Internet at www.disasterassistance.gov.

Remember that you can call any time, 24/7/365 at 1-855-2-THESBA or, visit us online at www.thesba.com.

 

Whom Should You Hire: A Contractor or a Full-Time Employee?

Whom should you hire?

When you find yourself overwhelmed with projects for your company, you may begin to consider hiring additional staff members. After all, making sure your team can handle the work is crucial if you are to meet deadlines and please clients with quality results. However, don’t be hasty in hiring a slew of full-time employees when the work may dry up tomorrow. Instead, consider hiring some contractors who can be kept on hand as the work ebbs and flows.

To determine whether full-time employees or temporary contractors would better suit your business needs, ask yourself these questions:

Will the work last?

If you’re working on a project that will involve an impressive workload for the next year or more, then it’s worth it to hire at least one more full-time employee. On the other hand, just because you have some more projects than usual this time of year doesn’t mean the work will last. You may end up going through the hassle of interviewing, training, and collecting paperwork for a new full-time worker, only to run out of work for him to do. To avoid wasting time and money on employees you don’t need, make sure the new work will be long-term.

Can you afford to pay for a full-time employee?

Contractors tend to have higher hourly rates than full-time workers for one reason: They don’t get the same benefits. Consider what you usually have to provide for staff members:
• Paid vacation
• Sick leave
• Health and life insurance
• 401(k) matching
• Workers’ compensation

Plus, you typically have to pay a portion of Medicare, Social Security, and unemployment taxes for each full-time staff member, Rhonda Abrams wrote in her USA Today article, “Should You Hire an Employee or Independent Contractor?”¹
Before you decide whether an employee or contractor would better fit your budget, add the benefit and tax costs to the salary you’d pay an employee, then compare the total to the simple hourly rate you’d pay a contractor.

Do you need help with a specialized project?

You may have no more work than usual, but you realize that your employees cannot handle the projects at hand. If you need some specialized skills for your current workload but do not foresee a long-term need for the specialized knowledge, you may benefit from hiring a contractor. For example, OPEN Forum writer Thursday Bram recommends hiring a contractor when you need a new website, because you’d likely only need a new site design once in the next few years. She sums up the matter by writing, “Contractors are generally one of the best options when you need a specialized skill set on a short-term basis.”²

Add the Overall Costs

Because contractors usually have higher hourly rates than full-time employees, you may benefit more from hiring a full-time employee if you need someone 40 hours per week. On the other hand, if you only need help around 20 hours per week, then a contractor is your best bet. If you end up needing more of the contractor’s time in the future, you can always find out if he is open to the idea of becoming full-time eventually. This can benefit both of you, offering some job stability and health insurance to your new employee, and saving you from paying the high hourly rates of the typical contractor.

For more information, visit:

1. “Should You Hire an Employee or Independent Contractor?
2. “Temps, VAs, Contractors, and Employees: Who Should You Hire?

The Small Business Authority cannot and does not give legal or tax advice and nothing contained in this article should be construed as such. Before taking any actions based on this or any other article published by The Small Business Authority, we strongly advise you to consult with an attorney and/or your tax professional.



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