Health Reform Perks: Employer tax credits could benefit your practice

A Timeline of Employer Credits

2010

• Health insurance tax credits of up to 35 percent kick in for small businesses.

2011

• Costs for over-the-counter drugs not prescribed by a doctor are excluded from reimbursement under health flexible spending accounts (FSA) and health reimbursement arrangements. These costs will no longer be reimbursed on a tax-free basis under health savings accounts (HSAs) or Archer Medical Savings Accounts (MSAs).
• The tax on distributions from an HSA or an Archer MSA that are not used for qualified medical expenses increases to 20 percent.

2013

• The amount of contributions to an FSA for medical expenses is limited to $2,500 per year, increased annually by a cost of living adjustment.

2014

• U.S. citizens and legal residents must have health coverage or face a tax penalty.
• State-based American Health Benefit Exchanges and Small Business Health Options Program exchanges are supposed to launch. Individuals and small businesses with up to 100 employees can purchase qualified coverage through the exchanges.
• For tax years 2014 and 2015, the health insurance tax credit for small businesses increases to 50 percent but only applies to businesses that purchase coverage through the state exchanges.
• Penalties begin for employers of more than 50 employees that don’t offer health insurance.
• Deductibles for health plans in the small group market are limited to $2,000 for individuals and $4,000 for families, unless contributions are offered that offset higher deductible amounts.
• Any waiting periods for coverage are limited to 90 days.

Sources: Patient Protection and Affordable Care Act, The Kaiser Family Foundation