Alot of confusion exists regarding the implementation of ObamaCare. Confusion seems to be at every level. The federal govenment has delayed the implementation for a year but not the individual mandate. First it was the employer mandate and now it is a delay on rules dealing with out-of-pocket expenses. The Government is missing virtually all of its deadlines. It is not hard to understand. With a manjor league scandal in the IRS that won’t go away, Benghazi-gate still out there (thanks to Fox News) and another war brewing, along with a stagnant economy, it would be hard for anyone to keep an ey on the ball for a law that no one likes.
One thing is for sure, small and large businesses are expecting the worst when it comes to Obamacare in terms of the law’s impact on premiums. Virtually every forecast from benefit consulting groups is predicting large increases in premiums. The range of increase is 35-75 percent depending on where you live. A family with an income under $94,000 per year that qualifies for the Silver Plan under the Affordable Care Act would pay almost $9,000 per year.
Employers with under 30 employees don’t need to provide coverage under ObamaCare. On one hand that is good, but on the other hand, a business needs to hold on to its good employees. Yes, it is good to just have a job in a bad economy but you still need good employees and they need health insurance. What to do?
A medical expense reimbursement plan is authorized IRC Sec 105(b) reimburses employees for qualifying medical expenses. The reimbursements are not taxable to employees and not subject to employment tax withholding. The reimbursements are deductible to the business. Pretty good, right?
The business needs to include all of its employees except the following:
(3) Those who work less than 35 hours per week.
(4) Those who work less than nine months per year
(5) Those under age 25
(6) Those who have worked for employer for less than three years
The primary goal of the plan is to reduce the cost of healthcare costs of the business, i.e. premiums for health insurance. The business adopts a medical reimbursement plan and adopts a plan with a much higher deductible with employer reimbursements for routine care. Coverage may be provided by the employer or employees may own their own policies. In most cases, the business can use the same network of providers. Small businesses with 10-30 employess can save $30,00 – 40,000 per year.
In order for the business owner to participate the business needs to be a C corporation. That means the business operating as a LLC or S Corporation needs to create a C corporation subsidiary that provides services to the operating company as part of the business. This is a small cost for restructuring.
The Law Firm of Gerald R. Nowotny is focused on helping business owners establich medical expense reimbursement plans to cost the exorbitant projected costs of Obamacare. Premiums are already going up. Call me today!