Tag Archives: small biz

Small Business Tasked to Tally Employee’s Health-Care Costs

Small employers are facing an unexpectedly onerous task: tallying their individual employees’ monthly health-care costs.

Starting in 2016, under the Affordable Care Act, employers with 50 or more full-time workers are required to file new tax forms laying out what individual employees are being charged for their employer-sponsored plans. The Internal Revenue Service released the new forms on Feb. 8.

Though completed forms aren’t due until next January, many employers are scrambling to get procedures in place now to collect the data. The new process entails measuring every individual full-time worker’s total monthly out-of-pocket cost for an employer health plan this year.

The IRS says tax officials will use this information to figure out whether employers are complying with the law’s requirement that businesses offer affordable health coverage to full-time employees and their dependents. Federal penalties for failing to provide an affordable health plan can run up to $3,000 an employee.

But small employers, especially those who keep their own books and prepare their own tax returns, say they’re finding the task of tracking employee costs for the plans to be confusing and time-consuming.

Rather than simply ask employers to record the price tag for a given health plan, the forms require employers to calculate the lowest-cost plan available to each full-time worker on a month-by-month basis—a figure that can vary as wages or working hours change, tax lawyers and workplace benefits consultants say.

That can be especially hard for retailers, restaurants, day-care services or other businesses where workers’ hours can vary from part-time to full-time, or so-called variable hour employees, they add. Under the law, employers aren’t required to offer coverage to part-timers.

“It’s a labor intensive process,” says Adam Okun, a senior vice president of Frenkel Benefits in New York, about completing the new IRS paperwork, Form 1095C. Employers who don’t start collecting this information today are heading for a “real nightmare next year,” he adds.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Small Businesses See Boom in 2015

Like other local business execs involved in construction, Andrew Musci expects the city’s ongoing building boom to continue to be a positive for him in 2015.

“We are seeing more opportunities for work,” said Mr. Musci, CEO of Altel Systems Inc., a Brewster, N.Y.-based commercial integrator of audio and video systems that has worked on renovations at Lincoln Center as well as the World Trade Center Transportation Hub. “The city has been a bright spot that has continued, despite the rugged economy.”

With the new year approaching, it’s not only firms in the construction industry and related trades that are seeing potential growth. An October survey of 300 business owners in the metropolitan area by Bank of America found that 76% were confident they would hit their year-end revenue goal, and 60% believe their revenue will grow in 2015. Some 48% said they planned to hire in 2015.

And some local owners say they are pleased by the city’s effort to reduce the fines and bureaucracy that plague small businesses. Department of Consumer Affairs Commissioner Julie Menin in July announced a program to, among other things, increase outreach and training, issue warnings in some cases instead of violations, and allow businesses to “cure” problems and avoid a fine. Also, in a last minute vote this month, the House extended a host of tax breaks at least for 2014, including allowing businesses to expense up to $500,000 in capital costs, a provision that has a big impact on small business purchasing decisions.

Nonetheless, many of the city’s small-business owners are adjusting to higher costs on many fronts, ranging from Affordable Care Act mandates to increased compliance requirements in certain industries. Meanwhile, some restaurateurs are worried about a hike in the minimum wage for tipped workers that Albany is pondering.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

No Stipends for Employees to Buy Health Insurance

Since the implementation of the Affordable Care Act, many small businesses have been intrigued by the possibility that they might be able to stop dealing with health insurance entirely and instead offer their employees a stipend to go buy insurance on the individual exchanges. But in a clarification issued in early November, the federal government appears to have taken a stand against that strategy.

There had been little doubt among most lawyers who follow the tax implications of the Affordable Care Act that a company would not be able to subsidize its employees’ individual health insurance with pretax dollars (the way that premiums for group health insurance are excluded from an employee’s income). But as we reported a few weeks ago, the government’s guidance on using post-tax compensation was murkier. With its recent statement, the government removed some — though not all — of that ambiguity.

The additional clarity came in the form of a “frequently asked questions” document issued by the Department of Labor. Even now, however, the issues remain complex and open to interpretation, and the tax and benefits lawyers contacted by You’re the Boss offered differing perspectives on the Labor Department’s answers. What better way to try to make sense of these issues than to borrow a trope from the government and present them in the form of an FAQ.

Businesses with plans that violate the health law’s market rules can face penalties of up to $36,500 a year for each affected employee.

Up until now, there had been a debate among lawyers about whether a company could expressly reimburse individual insurance premiums with taxable income, or, if not, condition the additional compensation on buying insurance — even if the money is not tied directly to the cost of premiums. But the latest advice from the Labor Department should end those arguments, according to four of five lawyers contacted by You’re the Boss.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary


The SHOP is Underperforming

The Washington Post (11/13, Harrison) reports that enrollment on the ACA’s new small-business health insurance marketplaces “has fallen well short of the administration’s expectations,” according to a Government Accountability Report released Thursday. The GAO examined enrollment totals for SHOP exchanges in the 18 states that built their own portals, finding that fewer than 12,000 small businesses signed up for plans during the first eight months. Though the Obama Administration “did not set SHOP-specific goals, the federal watchdog said that number was ‘significantly lower than expected.’” The GAO noted that enrollment numbers for the Federally-administered small-business marketplaces won’t be available from the CMS until next year.

The Washington Times (11/13, Howell) explains that the “Small Business Health Options Programs (SHOPs) were designed to let businesses with 100 or fewer employees — 50 or fewer in some states — buy plans in a special exchange set up just for them, and take advantage of a tax credit for covering their workers.” The Times adds that the GAO report comes just days after the Administration “dramatically scaled back expectations for participation in Obamacare’s individual markets.”

The AP (11/14, Murphy) reports that about 76,000 small business employees “had purchased coverage on 18 exchanges through June 1,” according to the GAO. That figure is “far short of the 2 million workers who were expected to sign up this year.”

The Hill (11/14, Ferris) adds that House Small Business Committee Chair Sam Graves (R-MO), who requested the report, “said Thursday that the data demonstrates the law’s failure for small-business owners and workers.”

Also covering the story are the Business Journals (11/14, Hoover), CNBC (11/13, Mangan), and the Daily Caller (11/14, Hurtubise).

Jeffrey R. Ungvary President

Jeffrey R. Ungvary



Will Premiums Rise for Small Businesses?

Today we return to our series exploring lingering questions small-business owners have about the Affordable Care Act. Today’s question is a basic one: Will premiums for small businesses rise in 2015, and if so, how steeply?

If you asked someone in the health insurance industry earlier this year — the executives at the insurance carriers or the brokers and agents who sell their policies — the word on premiums was grim. In March, an unidentified insurance industry executive told The Hill that “everybody knows” that the way the exchange has rolled out “is going to lead to higher costs.”

Then in April, a survey of insurance brokers by Morgan Stanley found that insurance premiums for small businesses were rising, on average, 11 percent, and at least 20 percent in 15 states. In Washington state, according to the report, small group rates were rising at the astounding rate of 588 percent. The report quickly became fodder for conservative media and Republican attack ads around the country.

Now it is October, and many states are finalizing rates in the small-group market for next year. And we are learning, anecdotally, that the rate increases facing most employees insured through a small business will be considerably lower than the dire predictions. By and large, it appears that the increases will be less than 10 percent. In some cases, they will be near zero — and at least one state is claiming the average rate increase will actually be a rate reduction.

The evidence is anecdotal because, as far as we can tell, nobody is systematically collecting, let alone analyzing, small-group insurance rates for next year, though in many states they are disclosed in regulatory filings that are freely available online. Several organizations are tracking rates for the individual market, most notably the accounting firm PricewaterhouseCoopers, which has a couple of staffers working nearly full time on the endeavor and has compiled average rate information in a clickable map.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary