Permanent Value

President’s Message

Bruce Doole
May 18th, 2010

In this month’s newsletter, Nate and I will be discussing how and when the new healthcare act will be affecting the two highest concentrations of clients we serve: small business owners, and retirees (and pre-retirees).  We’ve provided you with a timeline and the likely affect the bill will have on your financial situation.  If you would like a more detailed analysis on how the changes will affect your financial plan specifically, please call our office and we’ll schedule a time to discuss the new law with you further.

Immediately through 2010

Beginning on June 23rd, 2010, small businesses will be eligible to receive a tax credit of up to 35% of the premiums on the health care plans they offer to their employees.  This tax credit will be increased up to 50% of employee’s health care costs by 2014.  The full credit will be available to firms with 10 or fewer employees with average annual wages of $25,000, or firms with 25 or fewer employees and average wages of $50,000.  Also, beginning in June, companies with early retirees will see a new system of reinsurance established to offset the expensive cost of coverage for benefits of those between the ages of 55 and 64.

2011 through 2013

At the beginning of 2011, small businesses will be able to create a simplified Cafeteria Plan aimed at providing tax-free benefits to employees.  This plan would ease the administrative burden that many small business struggle through when sponsoring a plan for their employees.  Also, all employers will be required to enroll their employees in a new national public long-term care program, unless the employee opts out.  And finally, businesses paying providers of property and services of $600 or more during the year will now be required to file information reports with the IRS.

2014

Waiting periods for employees to be eligible for health coverage will be 60 days, and 90 day wait periods will be prohibited.  All plans must be offered on a guarantee issue basis, preexisting condition limitations are prohibited as are annual and lifetime limits.  Fees for large companies (over 50 employees) will begin to be assessed if they do not provide insurance to their employees.  The fee will be $2,000 per full-time employees excluding the first 30 employees.  Also, so-called “Cadillac Plans” will be subject to an excise tax of 40% on insurers and plan administrators for any health plan that exceeds $10,200 per year for individuals and $27,500 for family plans.