Wiggle Room for Small Group Tax Credit Users

Does being a small business give you extra wiggle room? If you are a user of the small employer health insurance tax credit, you could get some extra wiggle room for upcoming healthcare reform deadlines. Some users will be able to take advantage of extra time to start buying coverage through the exchanges.

A new draft regulation from the IRS (Internal Revenue Service) attempts to provide employer tax credit users with a bit more flexibility. If you are an employer with 25 or less “full time” (and modestly paid) employees, you could benefit from the draft regulation.

The Basics:

1. The Patient Protection and Affordable Care Act created a health insurance subsidy for employers through the addition of a tax credit provision (Section 45R) to the Internal Revenue Code.

2. When the PPACA Small Business Health Options Program exchanges open, employers falling into this category can use the SHOP plan to qualify for the tax credit.

3. If you are an employer that meets the basic qualifications, but your plan years and taxable year start on different dates, it may not be possible to take advantage of the “SHOP” exchange at the start of the first taxable year starting in 2014.

4. The transition rules would help employers in this situation by enabling them to wait until the first day of its first plan year in 2014 to begin offering SHOP coverage (instead of the first taxable year).

5. In this case, the IRS would treat the employer as if they had offered SHOP coverage for the entire taxable year (2014).

Sometimes the little guys do get a little bit of a head start. Don’t ignore the chance to maximize your company’s options during these times of change.

If you have questions on eligibility requirements, how upcoming healthcare reform changes will affect you and your company’s benefits, etc. please get in touch today. DeWitt Risk Management Consultants can provide you with expert answers at 480-969-0202.

Meet the YouToons: Getting Ready for Obamacare

The YouToons Get Ready for Obamacare: How Will YOU Be Covered?

Trying to decide what Obamacare means for you, your company or your employees? Meet the YouToons. DeWitt Risk Management urges everyone to get a general idea of the changes on the horizon and what they’ll actually mean for healthcare, the workplace, home, and family.

This short video about the health insurance changes coming your way under the Affordable Care Act (sometimes called Obamacare) gives you the basics; all you need to know to get ready. Big changes are coming in 2014. It’s time to get ready.

Questions? Concerns? Simply need to commiserate about your specific situation and how to maximize benefits while minimizing costs? Get in touch with one of the risk management specialists at DeWitt Risk Management today.

Zane Benefits’ Pre-Tax Premium Payment (PPP)

DeWitt Risk Management can show you how to offer every employee the chance to save 20-40% on the personal health insurance coverage of their choice. It’s the perfect solution for companies that don’t offer group health insurance coverage to their employees.

If you don’t offer group insurance benefits to your employees, you’re not alone. According to the Employee Benefit Research Institute, more than half of employees don’t have group health benefits. (47% of employees aren’t offered group health coverage and 15% aren’t eligible for employer health coverage).

Problems preventing companies from offering health insurance coverage to their employees may seem impossible to overcome:

  • Cost
  • Participation Requirements
  • Turnover
  • Part-Time Help
  • Seasonal Help
  • Multiple Locations

But there is a solution. It’s Zane Benefits’ Pre-Tax Premium Payment (PPP).

  • Extremely Low Cost
  • Zero Participation Requirements
  • Increased Employee Retention
  • Both Full Time and Part Time Employees Eligible

PPP reduces the amount of money your company pays in FICA tax AND increases employee retention by providing a tax savings for your employees. PPP (Pre-Tax Premium Payment) is a Section 125 (similar to the 125 doc many companies may already have in place that allows pre-tax deductions of group premiums). PPP enables your employees to purchase their own personal health insurance coverage with tax-free dollars. By calling or emailing DeWitt Risk Management to implement PPP you can help your employees save between 20-40%. They obtain the savings simply by paying their own personal insurance coverage premiums with pre-tax dollars rather then after-tax dollars. Utilizing PPP also gives employees the benefit of being able to choose the personal health insurance coverage that is best for their individual situation and health needs. The benefits even extend to supplemental coverages (dental insurance, vision insurance, etc.)

In general terms, Zane Benefits’ PPP allows employees to select a pre-tax salary reduction. This amount can then be reimbursed back to the employee after their approved personal health insurance premium has been paid. Paying personal/family insurance coverage premiums with pre-tax dollars means savings that coincide with each employees tax bracket (typically a savings of 20-40%). This reduction in taxable income for each of your employees results in reduced FICA taxes for the company so PPP provides financial benefits to both the employer and the employee.

zane benefits

Consider the following example:

A company named We Hire People has 25 employees. One of their employees is named Sally Worker. Sally Worker discussed her family’s specific health insurance coverage needs with an Individual Product Specialist at DeWitt Risk Management. After choosing the specific health insurance coverage that would best suit their needs, Sally Worker had a monthly health insurance premium of $500. Her income tax bracket is 25%. In this particular situation, Sally Worker will save $125/month by paying her individual health insurance coverage premium with pre-tax dollars through Zane Benefits’ PPP. With monthly savings at $125, Sally Worker will benefit from an annual savings of $1,500. Using this example, We Hire People gets FICA savings of $39.25/month (7.65% monthly savings). The annual FICA savings received as Sally Worker participates in Zane Benefits’ PPP adds up to $459.00. If we use Sally Worker’s savings as an average for the rest of We Hire People’s 25 staff members, we can estimate that offering employees the chance to save through Zane Benefits PPP provides FICA tax savings of $11,475.00 per year for the company.

Are you ready to calculate your company’s potential annual FICA tax savings? Give DeWitt Risk Management a call. We can provide each employee with the opportunity to calculate their potential savings by paying current personal insurance premiums pre-tax vs. after tax as well as providing employees without individual health insurance coverage with personal consultations to discuss potential coverages that suit their budgets. Offering PPP to your employees could mean substantial savings for your business.