Free Money! Figure Out How Much You’re Getting!

Okay, last week I told you about the small business health care tax credit and how you might qualify.  Well, this week our friends at the IRS and the Department of Health and Human Services have put out more guidance for us. 

If you qualify, the law states that you can claim the employer paid portion of premiums as long as you pay at least 50% of the total cost.  There is also a clause that caps the credit.  The law reads:

the amount…with respect to any eligible small employer is equal to 35% of the lesser of  1) the aggregate amount of nonelective contributions the employer made on behalf of its employees during the taxable year…for  premiums for…health plans offered by the employer…,  OR  2) the aggregate amount of nonelective contributions which the employer would have made during the taxable year…if each employee…had enrolled in a…health plan which had a premium equal to the average premium…for the small group market in the rating area in which the employee enrolls for coverage.

The Dept. of HHS has calculated that the average premium for the small group market in the state of Illinois is $5,198 for employee only coverage and $12,309 for family coverage.   If you live in a state other than Illinois, you can look at this helpful IRS document.

So here’s what that means for qualifying Illinois businesses. As an example, let’s say your business paid $80,000 of the total $100,000 in premiums (or 80%).  Also, let’s say that you had 10 employees making less than $25,000 (so you qualify for the full credit) and that 5 of those employees had single coverage and the other 5 had family coverage.  Your credit would be 35% of the lesser of 1)$80,000 (the amount you actually paid) or 2) $70,028 (80% of 5 x $5,198 plus 5 x $12,309).   At the end of the day, your business would get a credit of $24,509.80 (35% x $70,028).

Got that?  I know, the math can be confusing.  If you need more help, the IRS tries to help explain it here.  My advice — hire a good accountant.  That will probably run you, as an example, $24,509.80.


How Can You Save Money on Healthcare?

Humana has developed a number of these creative educational videos geared toward understanding healthcare, benefits and insurance.  Take a look at their staysmartstayhealthy website.

Work Comp 101

Earlier this month, Bill Stankevitz wrote a series of articles for the Business Ledger explaining the ins and outs of worker’s compensation. The series is one that every business owner MUST read. Rather than attempting to explain or re-post the articles, I am providing links to the articles themselves.


Understanding Worker’s Compensation
Part I
Part II
Part III
Part IV

Take Advantage of Small Business Health Care Tax Credits

The Internal Revenue Service has issued new guidance to make it easier for small businesses to determine whether they are eligible for the new health care tax credit under the Affordable Care Act and how large a credit they will receive. The guidance makes clear that small businesses receiving state health care tax credits may still qualify for the full federal tax credit. Additionally, the guidance allows small businesses to receive the credit not only for regular health insurance but also for add-on dental and vision coverage. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.

For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals. Here is a step-by-step worksheet to help you determine if your business qualifies.

Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011.

Hello world!

Welcome to the blog!  Businesses today are constantly faced with risks that can threaten their viability.  We hope to address some of those risks and what can be done to prevent them.   We will also have some fun along the way, sharing interesting stories, funny observations and perhaps even provide you with information you can use!

Be sure to check back often.  Don’t forget to bookmark us!  You’ll want to make us a part of your daily routine.

Health Care Reform – What does it mean for your business?

Since the Patient Protection and Affordable Care Act was passed in March, we have been getting A LOT of questions from the business community about it.  So, I will attempt to explain it in a forthright fashion.   Actually, I will just sum it up briefly here.  If you want more detailed information see this fantastic article.

A brief timeline:


Pre-existing conditions for children will be eliminated
Adult children up to the age of 26 (married or unmarried) can be added to their parent’s coverage
Lifetime limits will be eliminated from all health policies
Insurance companies will not be able to rescind coverage (except in cases of fraud)
Tax credits for small businesses (25 or fewer employees) are available


Over the counter drugs will not be considered a ‘qualified expense’ for HSA and FSA.
The penalty for withdrawing money for non-qualified expenses will increase from 10% to 20%
Employers will have to report the value of the health care coverage provided to each employee on his/her W-2


Employers will have to notify employees about the Health Insurance Exchange (which will be opened by the States in 2014)
Health FSA’s will be limited to $2500

2014 – The Big Year

Individuals will be required to have health insurance or pay a penalty
There will be no pre-existing condition criteria for anyone and all health insurance will be guaranteed issue (you can’t be turned down)
Employers with more than 50 full-time equivalent employees will have to offer health insurance or pay a penalty
Employers with more than 200 employees will have to automatically enroll employees into the company health plan (with an opt-out option)
Employers can give ‘qualified employees’ (those earning less than 400% of the poverty level) vouchers to buy insurance in the exchange

These are just a few of the provisions that will have an effect on businesses. If you would like more information or have further questions, don’t hesitate to contact me.

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