2010 Health Care Legislation: a timeline for small businesses

Full text Patient Protection and Affordable Care Act (Health Care Bill)

Beginning 2010: If you have 25 or fewer full-time equivalent employees, who earn $50,000 or less annually, and you provide them health care coverage, you can get a tax credit up to 50% of your contribution to their health care costs.

• This 50% tax credit is reduced if you have more than 10 employees or their average wages are more than $20,000 per year.
• The tax credit does not apply to owners or their dependents
• Non-profits receive 35% instead of 50% and their credit is taken against payroll tax rather than income tax.
• Employers must pay at least 50% of the premium. The tax deduction is on the employer's contribution only.
• For the full text, visit pages 120 to 124 in the Health Care Bill.

2011: Small businesses with under 100 workers that institute wellness programs can receive a government grant for five years to partially offset their costs.

• The amount of the grant has not been determined.
• Wellness programs must have health education, preventive screenings, health risk assessments, ways to encourage employee participation, initiatives to change unhealthy behavior, and a supportive work environment.
• For the full text, visit pages 859 to 860 in the Health Care Bill

2011: Health savings accounts (HSAs) for workers will be replaced by a Simple Cafeteria Plan which will be available to small businesses with 100 or fewer employees.

• Employers are not required to offer a simple cafeteria plan; it is only an option
• Employer contributions to the cafeteria plan must be at least 2% of the employees' compensation.
• The simple cafeteria plan does not have to be offered to employees with less than one year service
• For the full text, visit pages 756 to 758 in the Health Care Bill

2012: REPEALED: All businesses will have to issue 1099-M forms for any business that they have paid $600 or more for services and $5,000 or more for products.

• Previously, businesses did NOT have to issue 1099-M forms for corporations. This means that businesses must obtain the federal EIN number for all their vendors.
• For the full information, see page 737 in the Health Care Bill.

2013: The employee portion of Medicare tax for high income earners -including business owners paying Social Security self-employment tax - will increase to 2.35% of wages above $200,000 ($250,000 if married). The employer portion of Medicare tax stays at 1.45%. (see pages 752-3, amended by page 902) Sole proprietors, partnerships and LLC business owners pay Social Security self-employment tax.

2014: State-based insurance exchanges will be available to small businesses and individuals. Businesses with 50 or more employees will be required to provide health coverage. Individuals with income between 100% and 400% of the federal poverty line will be eligible for premium assistance, which will be paid directly to the insurers.

• For the full text, visit pages 171 to 173 in the Health Care Bill
• Information on requirements for businesses with 50 or more employees begins on page 134.
• Information on premium assistance begins on page 95.