Tax Credits:
What is a small business credit? With the implementation of the new Patient Protection and Affordable Care Act, small businesses that pay for more than half of their employees health insurance cost may be able to receive a small business tax credit. A small business tax credit is a credit that a small business receives against their taxes if they only have less than 25 full-time employees, and they cover at least 50% percent of health insurance cost and the yearly employee income average is under 50,000 per year (TriNet.com, 2013).
How much is the tax credit? How much a small business tax credit is depends on the business owner’s contribution to their employee’s health insurance. The tax credit is employed on an adjusting scale with an available maximum credit of 35% for a business that has less than 10 employees that average below $25,000 annually. The tax credit stops at 25 employees averaging $50,000 and above in annual wages. Under the Patient Protection and Affordable Care Act, the tax credit will increase to 50% in reduction to companies that provide health insurance for less than 25 employees and they are using the health insurance exchanges set up by each state (Klien, Business Week.com, 2013).
Tax and Fees:
What is Comparative Effectiveness Research (CER)? Used as tool to improve health care quality and lower health care spending, the Patient Protection and Affordable Care Act initiates the use of comparative effectiveness research to make more desirable health outcomes by transferring and expanding knowledge of evidence and information to health care patients, providers, and decision makers about the responses to treatments compared to other options. According to the National Institute of Health, comparative effectiveness research is describe as “ the conduct and synthesis of systematic research comparing different interventions and strategies to prevent, diagnose, treat and monitor health conditions (NIH.gov, 2013).”
Why does Comparative Effectiveness Research exist? With the high costs of health care throughout the United States making it challenging for the federal government and private health insurance sector both, there still may be hope in lowering the high cost of health insurance for both marketplaces. The apparent answer seems to be comparative effectiveness research, it exists to help consumers, physicians, purchasers, and policy makers of health insurance coverage to make the best possible, most reasonable, and correct decisions that will lead to the improvement of the current conditions of America’s health care for all individuals, families, and businesses. Comparative effectiveness research has an important role in the development of research for new treatment techniques and medication because not everyone responds the same way to certain medicines and methods used in the medical field. Comparative effectiveness researchers make information available about the dangers, effects, and benefits of the options for treatments so they can communicate knowledge to medicine manufacturers and consumers better choices concerning their health. Comparative effectiveness researchers collect information in two general ways, which include: Study available data that exist from different groups of people from previous conducted clinical trials and conduct practical research designed to look at the effectiveness of a health care option, medicine, test or procedure in order to derive original evidence. Comparative effectiveness researchers use a large range of techniques and resources to analyze their findings and format the information so that it is easily understandable and convenient for use for consumers, health insurance companies, policy makers, and health care workers (DTMI.edu, 2013).
Who will have to pay CER fees? To help patients, physicians, purchasers, and policy makers of health insurance coverage make the right health care decisions and improve Comparative effectiveness research. The Patient Protection and affordable Care Act developed a Patient-Centered Outcomes Research Institute. The research performed by the institute is to be funded by fees paid by insurance companies and sponsors of self insured health plans. Comparative effectiveness research fees will be enforced and collected similar to the way the IRS receives payments for taxes. The Patient Protection and affordable Care Act clearly describes who will be subjected to pay the CER fees, it states that the issuer of specified health insurance policy and plan of an applicable self insured health plan are responsible for paying CER fees. It also states that some government corporations that provide health insurance and self insured health plan sponsor are subjected to CER fees, but it says that government programs, such as Medicaid, Medicare, and the Children’s Health Insurance program are exempt from paying CER fees. Retirement health insurance plans usually are not required to pay CER fees by the Patient Protection and affordable Care Act, but some issuers and sponsor may have to pay unless they have plans that are accepted under the Health Insurance Portability and Accountability Act. Comparative effectiveness research fees are calculated based on the number of employees and dependents covered on a health plan. The fees are calculated in the following ways:
Fee for the first year is equal to $1.00 times the amount of people on the plan (Plan years ending before Oct. 1, 2012 to Sep. 30, 2013).
Fee for the second year is increased $2.00 times the amount of people on the plan (plan years ending before Oct. 1, 2013 to Sept 30, 2014).
Fee for the third year is increased to the applicable dollar amount of the prior fiscal year's dollar amount plus an adjustment for medical inflation. (Plan years beginning after Oct.1, 2014).
(United Healthcare.com, 2013).
Under the Patient Protection and affordable Care Act, large employers with at least 50 or more full-time employees were subject to penalty beginning January 1, 2014. If they did not offer health insurance coverage that is "affordable" under the Patient Protection and affordable Care Act standards. But with the complexity of implementing the requirements and a need for more time, the “employer mandate” feature of the law has been delayed until the beginning of 2015 (Cooke, Mondag.com, 2013).
Due to the time and the implementation process, the Patient Protection and affordable Care Act delayed small business program until 2015. The provision of the law intends to provide a number of health insurance plan options to small businesses beginning of 2014. And beginning in 2015 employees can start choosing a plan they want from a full range of health insurance plans in the marketplace (California Healthline.org, 2013).
The United States citizens experienced the first government shutdown since 1995 when the United States government shutdown from October 1st to the 17th, 2013 because congress couldn’t elect the vote to fund the fiscal year of 2014 for the Patient Protection and affordable Care Act. During the shutdown there were nearly 800,000 federal employees furloughed and approximately 1.3 million were expected to work without knowing when they would be paid. The shutdown was third longest government shutdown in American history. As federal employees were of work without receiving any pay, congress and other government official still continued to receive pay checks (HLNtv.com, 2013).
What recommendations do you have for the small business employer? Under the Patient Protection and affordable Care Act, small employers are not required to provide health insurance coverage. I would recommend that a small employer remain a small employer unless they are planning to tremendously increase their business endeavors. Staying a small employer will help a company obtain their profits for the future. But I also think that with the tax credit a small employer may be eligable to receive for supplying health insurance to their employee’s. The company should provide health insurance to employees because they most likely deserve it or they most likely wouldn’t be their in the first place. I recommend that a small employer take care of their employees because they may work harder to help a business meet their goals and objectives. On the other hand, a small employer that needs extra worker to achieve the business objectives could always acquire workers through temporary services until they think the workers are ready to become full time employees.