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The 2010 Healthcare Act as Amended by the 2010 Healthcare Reconciliation Act (hereafter known as the "Act") passed on March 30, 2010. Most of the Act’s provisions do not go into effect until 2011 and future years. This timing provides the opportunity to start planning now. The following is a summary of the Act’s significant tax provisions as they apply to Business Enterprises and the taxable years they are to take effect in.
This Act does not require employers to provide health insurance coverage, but charges a "play or pay" penalty to large employers (50 or more full-time employees) for not providing insurance, while offering tax incentives to small employers to encourage them to offer health insurance. A "grandfather" program, an employer plan in existence on March 23, 2010, does not have to change to comply with the Act’s provisions. Plans will be at-risk to lose their "grandfather" status should they significantly cut benefits or increase out-of-pocket expenses for their insured’s. Taxpayers losing their "grandfather" status could reasonably expect their health care costs to rise significantly. (The Act defines full time as working a minimum of 30 hours per week.)
- 2010 – A health insurance credit is available to small employers who purchase health insurance for their employees. A small employer is defined as one with less than 25 full time employees and average annual wages per employee of less than $50,000.
- 2012 – Employers will be required to report annually on their employee’s W-2 the value of the employer provided health insurance.
- 2014 – Large employers (with 50 or more full-time employees) will be subject to a nondeductible penalty for failure to offer reasonable employer-sponsored health insurance. This provision is intended to keep employers from only offering high deductible and premium plans to its employees who cannot afford the coverage.
- 2018 – Insurers (generally insurance companies) must pay a 40% excise tax on high-cost health insurance coverage when compared to government-specified thresholds. Employers sponsoring health insurance will be responsible for this complex calculation, as well as reporting the required information to the insurer, so the insurer can remit their excise tax liability.