Business Insider April 2015

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BUSINESS INSIDER P r o m o t i n g a n d e n h a n c in g b u s i n e s s w i t h i n t h e C e r r i t o s a re a

Volume XII, Issue X

April 2015

Paying for Healthcare With companies with 50 or more employees facing the Affordable Care Act next January 1st, many are looking for cost effective solutions to help provide health care to their workers. Most small to medium sized businesses do not have the large human resources infrastructure to help them work through the paperwork to comply with this new law. According to the National Small Business Association, adhering to the law could cost more than $15,000 on average. Certainly, it will cost time and money. For some employers, the hassle and cost of providing health care benefits can be daunting. There is now a trend for employers to give money to employees to buy health insurance on their own rather than offering a plan through the company. This “defined contribution” concept is nothing new, but it could be a more cost effective route for employers to control expenses when dealing with the escalating costs of health care. However, this is a major change in how employees get their health care. Currently, employees are not taxed on contributions made by their employer that go towards paying for health care. If an employer decided to offer employees a lump sum of cash to help pay for health care coverage, that amount could be taxable as income. Of course, some employees could qualify for tax credits that might reduce the costs of monthly premiums. Right now, that figure is 400 percent of the federal poverty limit (nearly $46,000 for individuals and just over $94,000 for a family of four). “Employers need to be cautious when looking at providing these types of lump sum payments,” said Christina Vicencia Jones, CPCU of Vicencia & Buckley Insurance, a division of HUB International. “These payments need to be factored in payroll tax and cannot be considered pre-tax.” Some employers are opting for a reimbursement option, where they reimburse an employee for all or part of their health insurance premium. In this case, the employee must provide proof the employee paid for health insurance and that the health insurance coverage was in force for the time period when the reimbursement is paid. The employer may make payment directly to the insurance provider, to the employee, or to both. If the employer complies with the requirement to secure proof from the employee that they used the funds to purchase health insurance coverage, the payments would not be considered taxable income. Still, this seems like a great deal of time and effort. Employers and employees have other options to save funds, in some cases tax free, to help pay for their health care. Health Savings

State of the District Luncheon ABC Unified School District Superintendent Dr. Mary Sieu and ABC School Board President Maynard Law