Archives for August 2013

Traditionally, freelance workers and small business owners have been unable to afford the high costs of health insurance. The investment was simply too high to justify the potential reward. However, as part of the health care Affordable Care Act, there are several new CO-OP (Consumer Operated and Oriented) plans being created to help generate competitive pricing among insurers and pass savings along to consumers.
What are Consumer Operate and Oriented Health Plans?
More commonly referred to as CO-OPs, these health plans have a single primary purpose, according to The Commonwealth Fund, to promote the long-term health and well-being of their customers as affordably as possible. The federal government is investing heavily in these startups in hopes of providing creative solutions to the healthcare problems throughout the country. They are investing by providing funding to help these programs get started and by also exempting them from paying federal taxes.
How Do CO-OPs Help Small Businesses?
Many small business owners want to offer benefits to their employees. They know it’s necessary in order to compete for talented employees. However, the high costs of health insurance for employees have always made the gesture impractical in the past. CO-OPs are private nonprofit health insurance companies. The fact that they aren’t “for profit” agencies means they are able to offer options traditional insurers, who have investors and boards to answer to, cannot. It helps keep the prices lower while offering more innovative and creative treatment options to the insured.
When Will CO-OP Health Insurance be Available?
HealthAffairs Health Policy Brief explains that, “Starting in October 2013, people without access to coverage through an employer, Medicaid, or the Children’s Health Insurance Program will be able to purchase health plans through health insurance exchanges for coverage taking effect in 2014.”  The brief goes on to say that while the initial law required funding for at least one CO-OP in all each of the fifty states, budgetary restraints have limited the number to the 24 CO-OPs that have already been created – for the time being.
There are many benefits to gain as a small business owner, or even a freelancer, or contract worker, for considering the benefits of a CO-OP health plan. Aside from the fact this law requires insurance coverage beginning in 2014, the peace of mind of having insurance coverage is a huge weight off the shoulders of small business owners everywhere.
To learn more about Consumer Operated Health Plans and how they can benefit your small business, we encourage you to speak to us.

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Health Insurance Tax Credit for Small Business

Small businesses have traditionally been unable to offer health insurance benefits to employees. The primary culprit preventing small businesses from offering this particular benefit was the high costs involved in doing so. The Affordable Care Act, however, has made a few changes that make offering insurance to employees a more affordable option — even for the smallest of businesses. Health Insurance CO-OPs, the Small Business Health Options Program (SHOP), are health insurance tax credits are just some of the changes which are opening the health insurance doors that have been closed to small business owners in the past. What’s So Powerful About the Combination?
Health Care CO-OPs and tax credits, by themselves, would still not be enough to make offering employer insurance feasible for many small businesses. The combination, however, of affordable insurance alternatives such as CO-OPs with tax credits, makes the situation more tenable for small businesses that operate at marginal profits in order to stay afloat as it is. What Businesses are Eligible for Health Insurance Tax Credits?
There are several requirements that must be met in order for employers to be eligible to receive tax credits for offering health insurance. According to Aetna, these conditions include:

• Cannot employ more than 25 full-time equivalent employees in a taxable year
• Employer must cover a minimum of 50 percent of the coverage cost for employees
• Average annual wages cannot exceed $50,000
• Qualifying agreement must be maintained

In 2010, the maximum tax credit was 35 percent. That number will change to a maximum of 50 percent in 2014. However, extremely small businesses with 10 or fewer full-time employees and average annual wages lower than $25,000 stand to benefit most from the small business tax credit says the Small Business Administration. The goal, of course, is to provide the greatest support and assistance to low and moderate income workers.
The IRS also points out that if you did not owe taxes during the year, you are eligible to carry the credit forward or back to other tax years. Information Worthy of Note
The National Federation of Independent Business, NFIB, points out that there are several limitations business owners need to be aware of with the health care tax credit. First of all, business must pay at least fifty percent of the health insurance premiums for their employees in order to qualify for the tax credit.
Second, most businesses that do receive the tax credit will not be awarded the maximum amount. Not only are small business owners excluded from the tax credit (and exclusion in the calculations of wages), but also the owners’ family members including children, foster children, siblings, step siblings, spouses, certain cousins, and in-laws.
Because figuring tax credits and understanding benefits such as these is so complex, the NFIB also highly recommends that business owners consult with their accountants before determining their best courses of action.

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