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Old 12-31-2013, 10:18 PM
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Question Health ins premium and medical expence deductions for 2014

My CPA tells me that we as a C corporation can no longer deduct our health ins premiums or medical expenses for 2014. My wife and I each own 50% of the corp.We live in Minnesota. We are salaried employees of the corp. We have one non family employee. We have individual health plans for ourselves and our employee. Which the corp has paid 100% of the health ins premium as well as 100% of all medical expenses incurred by the salaried employees( my wife and I ). We have not paid any medical expenses incurred by our nonfamily employee, but have paid his health ins premium. Under the new Obamacare health plan legislation, I believe we are supposed to provide a group coverage health plan, which costs considerably more than our individual plans, as well as subject us to huge premium increases, and we have to pay our nonfamily employee's medical expenses. If we don't follow these new rules, we are subject to substantial fines. Is this correct? If so, is their a way around this? I searched for and read a similar post, but it applied to 2013, before "OBC" .



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Old 01-01-2014, 03:29 AM
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Originally Posted by cj56 View Post



#1;My CPA tells me that we as a C corporation can no longer deduct our health ins premiums or medical expenses for 2014.



#2;My wife and I each own 50% of the corp.We live in Minnesota. We are salaried employees of the corp. We have one non family employee. We have individual health plans for ourselves and our employee. Which the corp has paid 100% of the health ins premium as well as 100% of all medical expenses incurred by the salaried employees( my wife and I ). We have not paid any medical expenses incurred by our nonfamily employee, but have paid his health ins premium. Under the new Obamacare health plan legislation, I believe we are supposed to provide a group coverage health plan, which costs considerably more than our individual plans, as well as subject us to huge premium increases, and we have to pay our nonfamily employee's medical expenses. If we don't follow these new rules, we are subject to substantial fines. Is this correct? If so, is their a way around this? I searched for and read a similar post, but it applied to 2013, before "OBC" .
#1;For many years, businesses have picked up health insurance costs, either in full or in part, for employees. The IRS extends a deduction for the expense, whether you are running a limited partnership, a limited liability company, a C- or S-corp or a sole proprietorship. There are rules and conditions on this tax break, as well as a new wrinkle in the tax code that may assist small companies; with the passage of the Affordable Care Act in 2010, the federal government offered a tax credit to small businesses that offered health insurance coverage for employees. With some conditions, small businesses with less than 25 employees could deduct 35 %of their health insurance premiums from 2010 through 2013, and 50 percent of their premiums from 2014 on. The credit is only for employees, not for owners. Businesses with up to 100 employees will be able to buy insurance in the exchanges. In 2014 and 2015, states can limit participation to businesses with 50 or fewer employees. Companies with fewer than 25 workers may be able to obtain tax credits for up to two years of coverage bought through an exchange. States can open the exchanges to large employers in 2017.

#2; Businesses with fewer than 50 full-time employees are not required to provide health insurance for their employees under Obamacare. 95% of businesses in this size-range already provide health insurance for their employees, but the cost is usually high and coverage is often slim. If small businesses do not offer health insurance, their employees can go to the state health insurance exchange (as of October 1st) to enroll in a plan.

President Obama plans to lower health insurance costs for small businesses. Unfortunately, the existing health insurance system prices many small employers out of the market, leaving them unable to offer health coverage to their employees. President Obama's health care reform plan offers a series of proposals, including tax credits, to make insurance more affordable for small businesses and their employees; The Obama health reform plan for small businesses emphasizes using tax credits to help them purchase coverage for their employees. To qualify for the tax credits, small firms must offer quality health coverage for their employees and cover a share of the premiums. The tax credits would be available on a sliding scale. The Obama plan requires medium-sized and large companies, the majority of whom offer health insurance to their employees, to offer coverage or be subject to a payroll tax that funds coverage for the uninsured. The plan exempts small businesses from this "pay or play" requirement. Some of the benefits for small businesses are pretty clear.
Note; the health care plan proposed by Obama is lengthy, but does not always provide in-depth information. However, there are three key areas people in business should understand about the proposal because it could affect their businesses;1. Employers that do not “offer or make a meaningful contribution” to provide of help cover the cost of health care benefits for their employees will not get off for free; Employers that do not provide or substantially contribute to their employee’s health care, will be required to pay a percentage of their payroll to the government as a contribution to the national plan. This would not be an optional contribution and no guidelines have yet been offered as to what that payroll percentage contribution would be;2. Obama’s plan exempts small businesses from the requirement to provide health care benefits or contribute to the costs of the national plan. There have been no guidelines presented yet as to what constitutes a “small business; thowever, the Small Business Act states that a small business concern is "one that is independently owned and operated and which is not dominant in its field of operation.3. Small business owners would receive a new small Business Health Tax Credit in order to help reduce the costs incurred by small businesses who offer health care benefits. This incentive would be in the form of a refundable tax credit of up to 50 percent on premiums paid by small businesses on behalf of their employees.



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