In 2015, major tax provision changes will take place due to Obamacare. These changes will impact employers, pharmaceutical manufacturers and those in other health related industries. This blog will serve as a business tax guide to the key provisions of Obamacare.
Health Insurance Tax Credit for Small Businesses: In 2015, a company with less than 25 full time employees that pays an average yearly wage of less than $50,000 will be offered a tax credit based on a percentage of the health insurance premiums it pays for its employees. Tax-exempt businesses will qualify for a lesser credit. A for-profit small business will be eligible to receive a maximum premium reduction of 50% while a tax-exempt business will qualify for a maximum reduction of 35%.
These reductions differ from the 2014 provisions of Obamacare which will require small businesses to participate in an insurance exchange in order to claim premium credits.
Employer Mandate: In 2015, a company with at least 50 full-time employees, including those who work at least 30 hours a week, will be required to make a “shared responsibility” payment if:
- It does not offer its employees and their dependents an employer funded health plan that has minimum essential coverage,
- Or it offers the plan but it is too expensive for some employees who could qualify for federal subsidies.
Annual Fee for Insurance Providers: Insurance providers (unless they are a certain type of non-profit provider) will be required to pay an annual fee if they collect more than $25 million in premiums annually. The fees will be determined by the IRS.
A penalty will be imposed on any insurance provider who lessens the written premium amount. In addition, any insurer who does not meet the deadline for reporting premium data (in the absence of reasonable cause) will be assessed a minimum penalty of $10,000.
Excise Tax on Medical Devices: Manufacturers, producers and importers of most medical devices will be required to pay a tax equivalent to 2.3%of the device’s sales price. Devices that are exempt from this tax include hearing aids, eyeglasses and contact lenses.
Annual Fee for Branded Prescription Drug Makers: Manufacturers or importers of branded prescription drugs will be required to pay a fee. The fee will be treated as an excise tax and will be collected by the IRS.
Please note that tax provisions described above are just a few of the changes that will take place due to Obamcare. The provisions of this legislation are far-reaching and affect many areas not discussed above.
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