Category Archives: Taxes


New Healthcare Reform Mandate Delays

NEW-OBAMACARE-DELAYAs you have likely heard, the Healthcare Reform Act requires that all large employers (50 or more workers) provide insurance to their employees. And not unlike several other addendums, this mandate has been pushed back – again. The administration is basically scaling back completely for medium sized businesses and less so, but still significantly, for the largest. Here are the keys to understanding the changes:

  • Businesses with 50 to 99 employees receive what amounts to a full year’s pass. For these companies (which affects the business segment that employs around 7 percent of the entire workforce), they will not have to worry about the mandate until 2016.
  • Business who employ 100+ workers no longer have to cover 95 percent of employees, as the new addendum say only 70 percent. Of course, like the aforementioned addendum, this only holds true until 2016 when it will revert back to the original policy of 95 percent. Incidentally, this directly affects businesses that account for the employment of 66 percent of today’s total workforce.
  • Volunteers (like volunteer firefighters) will NOT count as employees inasmuch as health care is concerned. This effort was to eliminate considerations to remove such volunteer positions.

 

While in another world, such mandate delays could have political ramifications. However, when it comes to the Healthcare Reform Act, one of the most polarizing topics in the national spotlight, most have already taken their position so this latest maneuver is not likely to move the needle. And as far as what it means for those covered, numbers show that the delay will likely amount to a relatively small, if not completely insignificant change.

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

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.

 

Business Owners Speak About Health Care Law

Business Owners Discuss Health Care

In January 2011, the U.S. House of Representatives passed HR 2, the “Repealing the Job-Killing Health Care Law Act.” The goal of HR 2, which passed 245-189, is to repeal the Patient Protection and Affordable Care Act as well as the health-care aspects of the Health Care and Education and Reconciliation Act. As reported on C-SPAN, the vote was considered symbolic.

In January 2011, Sen. Jim DeMint, R-S.C., introduced legislation that would repeal the health care law. It was read twice and put on the Senate legislative calendar. In February 2011, Senate Republican Leader Mitch McConnell, R-Ky., tacked onto an aviation bill an amendment that would have repealed the health care law. The Senate voted down the amendment 51-47.

The Small Business Authority spoke with small-business owners about the health care law and how it will affect them. Here are five viewpoints.

Expecting Lower Costs
Daniel G. Hacker, owner of Hacker Jewelers, Designers & Goldsmiths Inc. in Tecumseh, Michigan, believes that the reform will actually reduce his costs.
“We have met every year with our insurance representatives for the last 20 years or so,” Hacker wrote in an email. “This annual meeting consists of deciding how much more we will pay for how much less insurance coverage. We have to ask ourselves, ‘What can we live without, and what do we have to have and face the fact that we need to find the extra money for?’”

Hacker also believes that “the added tax credit looks like it will significantly reduce the costs for providing these benefits for my employees.”

That said, he does feel that small business needs relief from one section of the health care reform law: the provision that companies file a Form 1099 on any corporate or non-corporate entity doing business with them, once the pay exceeds $600. The law already had companies collecting 1099s on non-corporate providers of goods or services.

Hacker wrote that this provision “will inundate a small business like the one my wife and I run with new paperwork.”

Lawmakers are making various efforts to repeal the health care law’s requirement that business owners file 1099 forms. In February, the Senate voted to remove the requirement. According to the House Committee on Ways and Means press office, the House has not yet dealt with the Senate’s amendment.
Additionally, the Committee on Ways and Means approved in February two legislative pieces that deal with repealing the requirement: HR 4 and HR 705. The House passed HR 4 on March 3.
Sen. Mike Johanns (R-Neb.) also recently introduced a bill similar to HR 705.

Adding Labels Will Add 14 Million Hours
In the interest of making Americans healthier, the law requires some small businesses to comply with new requirements. Some people estimate that it will increase costs.

The National Automatic Merchandising Association (NAMA), headquartered in Chicago, represents the vending machine industry, which for the first time must list nutrition facts in close proximity to each article of food or the button you press to select it, if that information is not easily visible on the product.
Section 4205 of the health care law sets the following standard for vending machine operators: “In general—in the case of an article of food sold from a vending machine that (aa) does not permit a prospective purchaser to examine the nutrition facts panel before purchasing the article or does not otherwise provide visible nutrition information at the point of purchase; and (bb) is operated by a person who is engaged in the business of owning or operating 20 or more vending machines; the vending machine operator shall provide a sign in close proximity to each article of food or the selection button that includes a clear and conspicuous statement disclosing the number of calories contained in the article.”
The Food and Drug Administration estimates that compliance will cost vending companies 14 million hours per year.
NAMA said that there is no way to estimate actual costs as the rules are still being formulated.

The FDA has to create regulations to implement the law by March 2011. The FDA is currently taking comments for the regulations.
Ned Monroe, 
senior vice president of government affairs 
for NAMA, said 
the organization submitted a comment to the FDA on potential costs, stating, “Our preferred method of disclosure would be to post one menu with calorie counts of all foods which are stocked in a bank of vending machines.
“If this menu disclosure solution is accepted, then it would require significantly less than 14 million hours per year which the FDA is estimating.”

If the FDA does not back down on the requirement, said Monroe in an email, it would cost the small businesses that make up NAMA $40,000 a year.

‘I Can Compete’
Richard Hayman, president and CEO of Maryland-based Just Moulding, wrote in an email:

“Politicians know nothing about small business. Whatever our expenses are, we simply raise our prices to cover them. In the end, the customer/consumer always pays. From my perspective, as long as my competitors are required to play by the same rules I am, the playing field is level and fair. I can compete. Quality health care is a right, not a privilege, in my book. … Congress would like the public to believe that the cost is coming out of the owner’s pocket, and that’s very misleading. What Congress wants the public to believe is that businesses pay taxes on gross revenue. Our taxes are computed on net profit after all expenses. Quite a difference.”

Won’t Hire
Chuck Blakeman, a Denver-based author, speaker, and founder of the
 Crankset Group, agrees with those who say the health care law will kill jobs. He has six full-time and three part-time employees, and he had planned to hire two more people in the coming three months.
“Our health care costs went up 22 percent in September and our provider said it was a direct result of the health care legislation,” he wrote in an email. “They said it will go up another 10-15 percent in February or March of this year. It was already expensive, and is now prohibitive. We either won’t hire or won’t offer health care going forward.”

Blakeman equates the rise in health care costs for his employees to a tax increase, but commented, “Our taxes going up 100 percent wouldn’t have created as much cost as this legislation already has.”

Sees Positive Impact
Ben Coleman’s company, OrigamiBonsai.org, does business internationally. He believes that health care reform will make U.S. businesses more competitive in international markets. He explained, “The Small Business Health Care Tax Credit, part of health care reform, will give small businesses what is, in effect, the same rates as big businesses. The bill for health insurance will come down for small businesses. That means we can quote lower prices to our customers, which in turn means we’ll win more bids, both nationally and internationally.”

In an email, he wrote that he believes “health care reform will positively impact the bottom line, making smaller businesses more profitable than ever before.”

“Specifically in my business, health care reform will add durability,” Coleman wrote. His is a one-man operation, and he is uninsured because his insurer dropped him after two operations in 2008, and other insurers have been unwilling to pick him up.
“If I have another health disaster, I will have to tap my business for cash to pay the bills, and my business will die in bankruptcy court,” he wrote. “The only people who aren’t for health care reform are people who don’t understand it.”



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