The 50% Tax Credit, Where Are You?

kahlestyle

Expert
81
Why aren't we discussing this?

Some guesses:

We are focused on Indiv as they offer the home run opportunity in 2014

Groups aren't taking advantage of this now, why in 2014?

Its an accounting/cpa issue not ours-too cumbersome

Mix this in with the Forum consensus that we will lose small groups due to dropping coverage by dumping into the exchange

And I have to ask again........Why aren't we discussing this?

Seems to me that a 50% tax credit is a HUGE hammer to use against those considering dropping coverage as they all do the calculation of which pencils out better

But I havnt done any work on this yet
AnnH, does your accountant husband have some advice here?
My cpa says NONE of his small biz guys take advantage of the current 35% tax credit.......Why?

Will that change when it increases to 50% in '14?
Is it too confusing and cumbersome to be worth it?

Conclusion: if its manageable to advise the client on how to achieve the 50% credit AND it can make the difference between our small group clients dropping coverage or keeping it while taking advantage of tax credit,........ then it stops the bleeding for us, on groups thinking of dropping coverage

Has anyone done some hard calculations here?
 
Small business owners don't take advantage of the current credit because there is almost no benefit to them given the rules that must be followed to get the credit. Bumping from 35% to 50% won't change things.

And without the hammer of penalties for failure to offer health insurance + GI for individuals, I see very little incentive for small group to survive going forward.
 
The credit is only for employees earning under a certain amount, and also only available on businesses that purchase coverage through the SHOP in 2014.

Many businesses with employees under that earning threshold don't get coverage to begin with.
 
It's confusing, requires quite a bit of leg work, and only applies to certain small businesses that pay their employees under a certain salary (with a minimum employer contribution as well). Where the cost of living is high (like here in NY), employers who pay those kinds of wages don't offer coverage.

For everyone else, I think the work isn't worth the credit, or they just plain don't know about it. This isn't something that was heavily publicized or pushed through the accounting community.
 
the credit is only for lower paid employees, and if they are lower paid, it's better for the employee to get subsidies on the exchange.

Under this credit, for a simple example, gov't pays 1/3, employer pays 1/3, and employee pays 1/3.

Better to have the gov't pay 2/3rds with the subsidy (or more), and 1/3 employee (or less)

PS - i don't do group, so this is just my basic understanding of it.
 
A key point is that the credit is only available if the ER purchases through the SHOP exchange in 2014.

Very important to remember.
 
I think part of the turn off is it benefits the employers who pay their employees the least. So that's a hell of a pitch to start with.

Then the tax break is AFTER you've paid the premiums on your tax return, not while you're paying the premiums. So an employer is paying 100% up front and then hoping for a tax return break in August of the next year?
 
but these are also the employers who are most likely
to dump coverage and send them to the exchanges
I was hoping that this pencils in a way to give them pause and maybe even prevents them from dumping
 
I take it you have never run a business.

A) Employer provides health insurance, gets a tax break, but only on some employees (and not him/herself), and the credit only applies when they actually file their taxes.

B) Employer says goodbye to health insurance for employees, saves a buttload of money, no paper work, no employee whining about costs or benefits.

Which is better?
 
"I take it you have never run a business.

A) Employer provides health insurance, gets a tax break, but only on some employees (and not him/herself), and the credit only applies when they actually file their taxes.

B) Employer says goodbye to health insurance for employees, saves a buttload of money, no paper work, no employee whining about costs or benefits.

Which is better? "

currently run 2, thanks
it's obvious which one is better
is it your position that ALL business owners who look at the above choices will drop coverage since its so much better

that's what your answer infers
otherwise, why are the majority of small business owners currently offering benefits when they could save all the trouble of your point B now

I was looking for an extra nudge for them to stay with coverage presented by us agents. The tax credit is IN ADDITION to their current tax benefit which needs to be calculated before making the decision
 
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