Tips to Keep Small Businesses Financially Healthy

For Release: Jun 15, 2010
Contact: See Below

Tips to Keep Small Businesses Financially Healthy Under Health Care Reform

It’s still too early to know all the financial consequences the health care bill may have for business owners, but it isn’t too early to start now to consider financial strategies to manage possible increased costs, taxes and borrowing rates advises fee-only financial planner Rick Kahler.

A recently released study found the Congressional Budget Office overstated projections that the health care bill will reduce the federal deficit and may actually increase the deficit.  Higher government debt could put upward pressure on interest rates. As such, Kahler suggests business owners consider refinancing loans now to lock in today’s low interest rates, as well as payoff existing debt and avoiding new debt.

Beginning in 2014, deductibles for group health plans cannot be higher than $2,000 for individuals and $4,000 for families. Kahler says signs indicate existing policies with higher deductibles will be grandfathered, so he advises business owners consider implementing a high-deductible plan now to help keep future premiums more affordable.

While for the for the next few years, small firms with 10 or fewer workers and average annual wages of less than $25,000 will be eligible for tax credits of up to 35 percent of their annual health insurance premium costs, that tax break will be phased out for larger businesses.

Starting in 2014, the health care bill will mandate that businesses with over 50 employees offer adequate coverage to their employees or face a penalty of $2,000 per employee. Smaller companies are exempt from the penalties. Some will even receive a tax credit for providing health insurance as long as they have fewer than 25 employees and average annual wages of less than $50,000 per employee.

Kahler says the bill rewards companies that remain small and pay lower wages. Strategies might include spin off companies to non-controlled or affiliated groups, reduce employee count, or outsource work to fall under the minimums. These are actions that could take one to two years to implement so even though some health care bill provisions don’t start until 2014, he advises start to consider these actions now.

 Kahler expects insurance costs to continue to increase in the near future. To offset those higher costs, Kahler suggests eliminating insurance for “extras” like dental and eyeglasses.  For closely held C corporations, a medical reimbursement plan may allow businesses to write off all qualifying non-deductible expenses without being subject to the caps placed on HSA and FSA plans.

Perhaps the most important strategy is for business owners to pay close attention as the law is implemented, in order to manage the bill’s impact on the health of both their businesses and their employees.

Contacts:                                                                               

 Pam Kassner, 414-510-1838, pam@superpear.com

Rick Kahler, 605-343-1400, Rick@kahlerfinancial.com, http://www.kahlerfinancialgroup.com