Businesses learn details about Obamacare
Though the employer responsibility portion of the Affordable Care Act -- often referred to as Obamacare -- was delayed until 2015, there are still plenty of changes coming Jan. 1, 2014, and employers should use the extra time to prepare for the changes, the experts at Brady Martz and Associates informed the Dickinson business community.
The accounting firm gave two presentations to interested businesspeople Tuesday at the Biesiot Activities Center.
"Health care reform -- it's the largest social program that has come into existence in the program since Medicare and Medicaid," said Harmony Kolling, manager of Brady Martz. "It's a big deal. They're basically making a lot of changes to the health care system and it's going to impact the country quite a bit."
The individual mandate is the biggest change happening Jan. 1, requiring all Americans to have insurance or pay a fine based on their income. The fine will be part of 2014 tax returns filed before April 15, 2015, Kolling said.
"The penalty is going to be the greater of two different calculations, a flat-dollar amount calculation or a percentage of income calculation," Kolling said.
The penalty will be collected when filing a tax return.
Companies with 50 or more full-time or full-time equivalent employees that already offer health care will see little change, save for possibly having to add essential health benefits if it did not offer them in the past. Otherwise, any company health plans that existed before March 2010 will be grandfathered in.
"For many individuals, the marketplace will not change their insurance arrangements at all because a lot of individuals already have health insurance coverage," Kolling said. "It's intended for people who either don't have health insurance or don't have affordable health insurance."
The mandate requiring employers to provide coverage for their employees begins when the company has 50 full-time and full-time equivalent employees. Full-time employees are those working 30 or more hours per week. Two employees working 15 hours per week each would count as one full-time equivalent.
"It started out as an incentive for large employers to continue to offer coverage," Kolling said. "They don't want people to -- with budget cuts-- to cut out health insurance."
A new tax bracket will be added for couples filing jointly making more than $450,000 combined, said Nathan Sorenson, a shareholder at Brady Martz.
"The new addition for 2013 -- this is something that they passed the first week of January when they were doing all of that little rigmarole stuff at the end of last year and the beginning of this year -- they added the 39.6 percent tax bracket," Sorenson said.
There will be a 0.9 percent Medicare tax on wages that will not affect employers, save for them needing to withhold that much more from their employee's paycheck.
A 3.8 percent Medicare tax on net investment income will be added, Sorenson said.
There are rate changes on the capital gains and dividend taxes, and the per-person deduction phase-out will begin with married couples filing jointly making more than $300,000.
Questions about the Affordable Health Care Act and tax code changes can be fielded by accountants or insurance providers. To speak with someone at Brady Martz, call 701-483-6000.