Healthcare Reform and How it will Affect You and Your Business

Now for the hot topic –

Everyone is concerned about how The Healthcare Reform legislation Will affect you.

We are presenting the information as it stands today. But it will mostcertainly change…..

Jon ChesterPresident and Partner

Sterling’s Bookkeeping & Tax ServiceMaximum Efficiencies • Maximum Gains

Healthcare Reform Credits for Small Business

The recent health care reform legislation included a new health care tax credit for certain small businesses that provide health insurance to their employees.

The credit is available to small companies and tax-exempt organizations for the years of 2010 - 2013. Companies with 25 or fewer full-time employees with an average wage of $50,000 or less, and the company pays a minimum of 50% of their employees coverage are eligible. The credit is phased out based on size and salaries of the company. Companies with 10 or fewer employees with an average wage of $25,000 will receive the highest credit of 35% of premiums paid. This credit increases to 50% in 2014.

Note: The credit is claimed on the business tax return NOT the employment tax returns

If an owner of a business also provides services to it, does the owner count as an employee?Generally NO!A sole proprietor, a partner in a partnership, a shareholder owning more than two percent of an S corporation, and any owner of more than five percent of other businesses are not considered employees for purposes of the credit.

However, it is advised you speak to your accountant.

www.irs.gov/newsroom/article/0,,id=220839,00.html

Indoor Tanning Businesses will have a new tax of 10% imposed as of July 1, 2010.

2010 – Healthcare Reform

Penalties for using Flexible Spending Accounts incorrectly will increase from 10% to 20%.

Earned Income Medicare tax will increase

from 1.45% to 2.35% in 2013 on individuals earning over $200,000 or couples over $250,000.

A plan to provide a vehicle for small

businesses to offer tax-free benefits will be created. This would ease the small employer's administrative burden of sponsoring a cafeteria plan.

2011 – Healthcare Reform

2013 – Healthcare Reform Contributions to flexible savings accounts will be CPI Price Index in

subsequent years.

A new unearned (Passive) Income Medicare tax of 3.8% for individuals earning over $200,000 or couples over $250,000 will be imposed.

Income Threshold deduction for unreimbursed medical expenses will

increase from 7.5% to 10% for those under 65.

Primary care doctors would get a Medicaid payment boost in the reconciliation bill. Beginning in 2013 and 2014, the doctors' payment rates would be on par with Medicare rates, which typically are about 20 percent higher than Medicaid.

2013 – Healthcare Reform The hospital insurance tax will increase 0.9 percentage points for

individuals earning more than $200,000 or couples over $250,000 , and it includes net investment income.

A 2.9 percent excise tax on the first sale of medical devices will be established. Exceptions are eyeglasses, contact lenses, hearing aids or other items for individual use.

Companies with 50 or more employees must offer coverage to employees or pay a $2,000 penalty per employee after their first 30 if at least one of their employees receives a tax credit.

Americans without insurance would face an annual penalty, starting in 2014 at $95 and increasing in later years. Those without insurance in 2016, for example, would pay the greater of two alternatives: a flat fee of $695, or 2.5 percent of their adjusted gross income.

States will be required to open Small business Health Options programs allowing a pool to reduce premium costs to be on par with large businesses

2014 – Healthcare Reform

The “Maserati” tax: The levy on high-cost insurance plans is scaled back and delayed, rendering it more a "Maserati" than a "Cadillac" tax. It would apply only to the portion of plans costing more than $10,200 per year for individuals, up from $8,500, and $27,500 for families, up from $23,000.

2018 – Healthcare Reform

Questions and ConclusionThis presentation is for informational purposes only and should not be taken as tax advice.

For Questions about a tax issue please contact your CPA or contact usSterling’s Tax and Bookkeeping

923 W. Glade Rd, Suite CHurst, TX 76054

Tel: 214.330.4682 info1040@sterlingstax.com

www.sterlingstax.com

IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.