What business owners – and most Americans – need to know before January 1

Beginning in just three months, most Americans will be required to purchase basic health insurance plans or face penalties on their tax returns. But what are the requirements for businesses?

In attempt to “demystify” the Affordable Care Act for Mount Shasta Chamber of Commerce members, CPA Lynn Teuscher of AGT and Elizabeth Mitchell-Collord of Community Healthplan of the Siskiyous gave a presentation on the new law Thursday of last week.

Businesses with more than 50 full time employees may face a monthly tax penalty if they don’t offer their workers a minimum value health insurance plan. They can postpone their compliance with the new law until December 2014, but they should be planning ahead, said Teuscher.

Businesses with fewer than 50 employees will not be required to offer insurance at all if they choose not to, he said.

It’s complicated

Mitchell-Collord said ACA regulations are constantly being clarified and “the answer to a question today might not necessarily be the answer tomorrow,” because things are changing so rapidly.

An example of this is the requirement for employers to send a letter to their employees by Oct. 1 letting them know whether they will offer insurance and to direct them to the state insurance exchange, Covered California. At the meeting on Sept. 11, it was a requirement and backed by a penalty of $100 per day it was late after Oct. 1. As of deadline today, the Department of Labor changed the letter to a “suggestion” with no penalties for non-compliance.

Mitchell-Collord pointed out no one is required to do anything under the ACA, as long as they’re willing to pay the “shared responsibility” penalty.

Teuscher explained that when the ACA, sometimes referred to as “Obamacare” or the “Healthcare Reform Act,” was signed into law by the president in 2010, it was only an outline and did not include specific guidelines for its implementation.

Over the past three years, three federal agencies have worked to implement it, including Health and Human Services, the Department of Labor and the Department of the Treasury, of which the IRS is a part.

How it will affect you and your boss

Beginning in 2014, most Americans will be penalized on their taxes if they do not carry an insurance policy that pays at least 60 percent of their medical costs.

Individuals can meet their obligation and avoid the tax penalty by participating in their employer’s plan or by purchasing an individual or family policy on their own.

Businesses with more than 50 full time equivalent employees (who work 30 hours or more per week) have several choices about how to offer plans and some will receive tax credits for offering insurance.

Even businesses who aren’t mandated to provide insurance coverage may want to do so, said Mitchell-Collord, in order to be competitive and if they can fit it in their budget.

Covered California will offer insurance policies to individuals and families. It will also assist small businesses provide coverage for their employees.

Those with income up to 400 percent of the Federal Poverty Level will be eligible for federal subsidies to afford their health coverage. These subsidies will be funded through a variety of taxes including penalties paid by those who don’t purchase insurance on their tax returns.

What to do now?

Mitchell-Collord cited an estimate that 8,000 Siskiyou County residents will be eligible to get health insurance through Medi-Cal or with subsidies through the exchange.

Covered California’s open enrollment this year will run from Oct. 1 through March 31. In subsequent years, the open enrollment period will run from Oct. 1 to Dec. 1.

Newly proposed IRS regulations will require that before people file their 2014 income tax returns, employers will issue IRS Form 1095-C, which will state in which months they had qualified health coverage, Teuscher said.

On Oct. 1, Siskiyou County residents can go online to coveredca.com to browse healthcare plans. Mitchell-Collord also encourages people to use local licensed and certified insurance agents who will be equipped to answer questions and assist them in finding the best plan for their situation.

Health insurance coverage purchased through Covered California will begin on Jan. 1, 2014.