How will the healthcare law affect you?

Now that the U.S. Supreme Court has decided to hear arguments in the case regarding last year’s Affordable Care Act, the future of the law is up in the air more than ever before. Since no one can predict what will happen in the case, it only makes sense to continue under the assumption that the law’s rolling requirements will become active as passed. But what those requirements are can be confusing for many small business owners.

The law’s implications are vast, and although many of the costly provisions affecting employers won’t be here for years, proper long-term financial planning makes taking a look today prudent business sense. Normally we’d be able to rely on historical data and projected analysis to formulate a relatively accurate, and hopefully optimistic, schematic of our school’s future, tailoring goals around those figures. But for now you’ll have to “ballpark” the figures related to health care costs (and their tax implications).

Although many small businesses (specified as up to 100 employees) expected to benefit from tax breaks related to the reform, the reality may be otherwise.

• Large flight schools (employ 50 to 100):
  • In 2014, you'll be mandated to provide coverage for all employees or pay a fine.
  • You can either choose to sponsor a health plan for 100 percent of your workers or pay $750 per worker in penalties.
  • Starting in 2018, employers who provide insurance costing more than $10,200 for individuals or $27,500 per family must pay a 40 percent tax on the excess cost of the premium. This could be a big burden on small businesses, as many premiums are already at that rate for even basic coverage.
  • Companies will be eligible to participate in the SHOP (Small Business Health Options Program) Exchanges; however, states may limit employers’ participation in the exchanges to businesses with up to 50 employees thru 2017.

• Medium flight schools (employ 25-49 people):
  • Nothing in the law requires you to offer health insurance.
  • You will not be penalized like larger companies.
  • If you want to provide health coverage for you and your employees, SHOP Exchanges may be a cheaper option. When the new reform takes effect it won’t put any caps on health insurance premiums and private insurance companies are expected to follow suit after Medicare, which increased its rates by 14 percent, according to the National Center for Policy Analysis (NCPA).
    
    
• Small flight schools (employ fewer than 25 or are self-employed):
  • Nothing in the law requires you to offer health insurance.
  • If you operate as a sole proprietor, then the tax reform will not offer you tax relief.
  • If you have incorporated or formed an LLC for your school, and you pay the majority of health care premiums for your workers, then:
    • As of 2010, you may qualify for a tax credit up to 35 percent of their premiums through 2013.
    • In 2014, that credit will increase to up to 50 percent of premiums, if you arrange insurance via one of your state’s health care plans or SHOP Exchanges.
  • If you are willing to give up the tax breaks in order to obtain a private insurance plan, then projecting the costs at incremental increases of 10 percent for 2012, 11 percent for 2013, and 14 percent for 2014 in your business and financial plans is appropriate, according to various outlooks.

More information on the law’s various deadlines and actions is available on the government’s Affordable Care Act website.