Of all the hidden costs now being discovered in the health care bill, one of the most concerning to the business community is Section 9006, which would place an unprecedented burden on small business reporting and paper work requirements.

This section includes a provision that requires businesses to file 1099 tax returns starting in 2012 for many purchases. It's bad news for all businesses, especially smaller ones. Urge Congress to co-sponsor the Small Business Paperwork Mandate Elimination Act , which would repeal this provision, and add your organization's name to the business community's letter to Congress.

Why the 1099 Provision is Bad News for Business:

• Businesses of all sizes will be required to report on each vendor for all purchases totaling over $600 annually, which will dramatically increase accounting costs and time-consuming paperwork burdens.
• The exemption for purchases from corporations will be lifted, and expanded to property (goods), as well as services.
• At a time when our economy needs small businesses to help our country grow out of this recession, saddling them with expensive new requirements and paperwork burdens only further hampers their ability to succeed and ultimately aid in our economic recovery.

From our early research, we have found employers with under 50 employees are not impacted too much, although there are some tax credit options for employers who choose to offer insurance. The Congressional Budget Office said the initial cost of the program will be $1 trillion over the next decade.

The following information is from The Wall Street Journal (3.22.10)

WHAT’S IN THE BILL

The $940 billion health-care overhaul will take nearly a decade to roll out in full. A look at the key parts of the bill and when they go into effect.

2010
Coverage

• Subsidies begin for small businesses to provide coverage to employees.
• Insurance companies barred from denying coverage to children with pre-existing illness.
• Children permitted to stay on their parents' insurance policies until their 26th birthday.

2011
Coverage

• Set up long-term care program under which people pay premiums into system for at least five years and become eligible for support payments if they need assistance in daily living.

Taxes and fees

• Drug makers face annual fee of $2.5 billion (rises in subsequent years).

2013
Taxes and fees

• New Medicare taxes on individuals earning more than $200,000 a year and couples filing jointly earning more than $250,000 a year.
• Tax on wages rises to 2.35% from 1.45%.
• New 3.8% tax on unearned income such as dividends and interest.
• Excise tax of 2.9% imposed on sale of medical devices.
• Cost control
• Medicare pilot program begins to test bundled payments for care, in a bid to pay for quality rather than quantity of services.

2014
Coverage

• Create exchanges where people without employer coverage, as well as small businesses, can shop for health coverage. Insurance companies barred from denying coverage to anyone with pre-existing illness.
• Requirement begins for most people to have health insurance. Subsidies begin for lower and middle-income people. People at 133% of federal poverty level pay maximum of 3% of income for coverage. People at 400% of poverty level pay up to 9.5% of income. (Poverty level currently is about $22,000 for a family of four.)
• Medicaid, the federal-state program for the poor, expands to all Americans with income up to 133% of federal poverty level.
• Subsidies for small businesses to provide coverage increase. Businesses with 10 or fewer employees and average annual wages of less than $25,000 receive tax credit of up to 50% of employer's contribution. Tax credits phase out for larger businesses.
• Taxes and fees
• Employers with more than 50 employees that don't provide affordable coverage must pay a fine if employees receive tax credits to buy insurance. Fine is up to $3,000 per employee, excluding first 30 employees.
• Insurance industry must pay annual fee of $8 billion (rises in subsequent years)

Cost control

• Independent Medicare board must begin to submit recommendations to curb Medicare spending, if costs are rising faster than inflation.

2016
Taxes and fees

• Penalty for those who don't carry coverage rises to 2.5% of taxable income or $695, whichever is greater.

2017
Coverage

• Businesses with more than 100 employees can buy coverage on insurance exchanges, if state permits it.

2018
Taxes and fees

• Excise tax of 40% imposed on health plans valued at more than $10,200 for individual coverage and $27,500 for family coverage.

—Sources: House bill; Kaiser Family Foundation 

For additional information visit the U.S. Chamber's Health Care Toolkit. 

What does the new health care law mean for small businesses?

Congress passed and President Obama signed comprehensive health care legislation containing a requirement for individual health care coverage and a de facto requirement for most businesses to provide health insurance.
While some of the reforms in the bill won’t kick in until 2014 or after, some changes begin immediately, such as tax credits for businesses.
 

Key provisions for small business include:

Requirements for Small Businesses
Companies with more than 50 employees would not be required to provide insurance to employees, but beginning in 2014 would pay penalties up to $2,000 per employee with the first 30 employees exempted if any eligible employees bought subsidized coverage through the state-based individual exchanges.
Health plans offered by a business will be required to meet certain criteria and employers will be required to cover 60 percent of overall employee health costs.

Small Business Health Options Programs (SHOP)
Health insurance exchanges, called Small Business Health Options Programs (SHOP), will be established no later than 2014 by government agencies or nonprofit organizations to help provide affordable health plans to small businesses with 100 or fewer employees. States will have the option to limit those exchange pools to companies with 50 or fewer employees through 2016. Companies that grow beyond the limit will be grandfathered in.
Businesses offering coverage would be required, in some cases, to provide a “free choice” voucher for employees who choose to purchase insurance elsewhere. Those businesses providing a voucher would not be assessed a penalty for employees who receive credits through a state-based exchange.

Tax Credits Begin This Year
Until the SHOP Exchanges are established, businesses with 10 or fewer full-time employees and an average wage of less than $25,000 a year will be eligible to receive a tax credit of 35 percent of health insurance costs. Companies with 25 or fewer employees and an average wage of up to $50,000 are eligible for partial credits.
During the first two years a company buys insurance through a SHOP Exchange, it will be eligible for a tax credit up to 50 percent of costs.
 

Companies with 25 or fewer employees and average wages of less than $50,000 could receive tax credits for contributions to employee coverage. The tax credit phases out as company size and average wage increases.
The law provides grants for up to five years for small companies that create wellness programs, and allows small employers to offer incentives—in the form of premium discounts and cost-sharing waivers—to employees participating in wellness programs and meeting health-related standards.

Individual Mandate
By 2014, most Americans will be required to have health insurance or pay a tax penalty. State-based American Health Benefit Exchanges will be established to provide affordable coverage, and tax credits will be available for individuals and families up to 400 percent of the federal poverty level.

Rules for Insurance Companies
The law prohibits annual and lifetime limits on coverage and prohibits insurers from dropping coverage of an individual except in cases of fraud. Insurance companies will not be able to deny coverage based on pre-existing coverage. All new insurance plans will have to meet standards of one of four categories: Bronze, Silver, Gold and Platinum. Deductibles are limited to $2,000 for individuals and $4,000 for families unless contributions are offered that offset higher deductible amounts.

Detailed information on the health care reform law can be found at:
www.kff.org

For more information on what it means for small business:
www.smallbusinessmajority.org
www.nfib.org
www.mainstreetalliance.org
www.nsba.biz

-- Source: KC Small Business

Week Ending March 19, 2010

Week ending March 12, 2010

Mid-Session Update - 2010

Week ending February 26, 2010

Week ending February 12, 2010

Week ending February 5, 2010

Week ending January 29, 2010

Week ending January 22, 2010