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What you need to do about Health Care Reform right now

Love it or hate it, health care “reform” is upon us.  Most of what was legislated will be put in place over the course of a few years but some of the new rules are effective as early as January 1, 2011.  A good portion of these are coverage changes that your insurance provider will manage.  Just so you are aware of what next year’s group health insurance plan will look like, these are:

  • Expanded dependent coverage
  • Children with pre-existing conditions cannot be excluded from coverage, and
  • Regulation of limitations on certain benefits.

From the small business owner’s point of view it is generally business as usual, including the huge annual rate hikes, but there is some good news in the way of a new credit.  If your business provides health insurance coverage to its employees you may qualify for a tax credit.

Employers who have fewer than 25 employees and average annual wages of less than $50,000, who also pay half or more of the insurance premiums will qualify for a tax credit for up to 35% of 2010 premiums, increasing to 50% by 2014.  The credit will be calculated on form 8941 Credit for Small Employer Health Insurance Premiums.  Not-for-profit employers will be eligible for a 25% credit, increasing to 35% by 2014.

Another Health Care Reform change that you and your employees will notice is that over-the-counter medicines will not be eligible for reimbursement from a flex spending cafeteria plan.  Beginning in 2011, only prescription drugs will qualify.

Your 2011 W-2 will look different also.  From 2011 forward, your W-2 will include the amount of health insurance paid on your behalf during the year.  Does this signal an indication that the government will eventually include that amount as taxable income?  It sure seems that way!

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