Health Care Reform, Part I

The Affordable Care Act of 2010 was a massive overhaul of the U.S. Health Care System.  Its provisions have far-reaching effects for the business and individual sectors. 

This is the first one of three discussions by us on this topic.

Additionally, these provisions pose a set of challenges and planning needs to businesses.  What is the impact of shared responsibility? What are the nondiscrimination requirements? How do we calculate premium assistance and cost sharing reductions? How is information reported to the IRS? What are the disclosure requirements? How are eligibility and credits calculated? How does the shared responsibility provision affect my business?

Here is a timeline of the small business policies year by year:

2010 The Affordable Care Act Becomes Law

● Many small businesses become eligible for new federal tax credits for the employer’s     contribution to the employees’ health insurance

2011 The Affordable Act Holds Insurance Companies Accountable

● To ensure insurance premium dollars are spent primarily on medical care, the law’s 80/20 rule requires that at least 80% of premium dollars collected by insurance companies must be spent on benefits and quality improvement. This 80/20 law translated into refunds of health care premiums.

2012 The Affordable Act Reduces Administrative Costs

● The law institutes a series of changes such as standardizing billing and requiring health care plans to being implementing rules for secure and confidential exchange of health information.

2013 Open Enrollment in the Marketplaces Begins

● On October 1, individuals and small business can seek to purchase affordable benefit plans by enrolling in the new Individuals and Small Business Health Insurance Options Program.

2014 The Marketplaces Open

● Congress must shop on the health insurance exchanges.

● Insurance companies are taxed based on their market share.

● Tax credits for eligible small businesses participating in the health insurance exchanges go up to 50%.

● Self-employed individuals must have health insurance that meets the minimum essential coverage standards, qualify for an exemption, or be subject to an assessable payment.

2015 Employer Shared Responsibility Provision Take Effect

● Starting in 2015, employers with 50 employees or more full-time or FTE must offer minimum essential coverage to their full-time employees or be subject to a potential Employer Shared Responsibility payment

● Tax credits for eligible small businesses participating in the health insurance exchanges go up to 50%.

2017 States’ Flexibility

● States have the flexibility to allow businesses with more than 100 employees to purchase coverage in the health care exchange.

2018 Cadillac Tax

● The “Cadillac” tax for higher quality coverage for individuals and employers purchasing insurance for employees is put in place.


To be sure, the effects of the Affordable Care Act on businesses are hard to navigate.

At Kasperek & Co. Accountants, we have the skill to assist you in planning for these new changes.