It may have taken 40 years for the government to pass health care legislation, but in the opinion of Wayne Martin, partner at Goldstein, Karlewicz and Goldstein L.L.P. and his colleague, tax manager John Rosenberger, the partisan passage of the 2,000 pages of legislation may see many changes ”“ perhaps even be repealed.

Both CPAs spoke to members of the Orange County Chamber of Commerce at its headquarters in Montgomery on August 17, with Martin focusing on the Hiring Incentives to Restore Employment (HIRE) Act of 2010 and Rosenberger laying out rules and regulations that will be levied on employers and employees as the new legislation rolls out.

Any unemployed individual who has not worked more than 40 hours in the past 50 days prior to the hiring qualifies the business owner, providing it is a new position, not replacing another employee unless that employee”™s position opened up because of a voluntary departure or for cause.

Full or part-time positions are acceptable; subcontractors, relatives of employers and those owning 50 percent of the company are not eligible.

For those businesses trying to make heads or tails out of the new health care legislation, however, the process is not as well thought out. “This was a partisan bill,” said Rosenberger, “and because of the upset in Massachusetts, where the election went to a Republican ”“ unheard of in a Democratic state ”“we may see a significant shift in Congress and the Senate and in the presidency. States are already suing over the constitutionality of the legislation, and I believe we will see many revisions ”“ perhaps an outright repeal ”“ before it takes full effect by 2018.”

But it”™s 2010 right now, so there are provisions that took effect immediately after it became law on March 23. Among them are extending benefits to adult children who have no other source of insurance until their 26th birthday; no cap on essential benefits, “with the emphasis on essential,” noted Rosenberger; pre-existing condition exclusions for children and rescission of individual coverage  are prohibited.

For employers with 50 or fewer employees, most will likely escape the ponderous paperwork that will accompany the Patient Protection and Affordable Care Act of 2010. For others, “It may mean hiring an extra person just to handle the paperwork,” said Rosenberger, telling business owners that those who will qualify for health care subsidies must prove their income is under a certain amount. “But that does not include just wages. It also includes money that person may receive from rent, cash income received,” and may even include child support payments.

“In other words, you must give your employer all your private information, including your spouse”™s income, other sources of income, royalties and anything else that generates income in your family… not a happy prospect for those who like to keep their personal information personal,” Rosenberger said. And employers are expected to gather and report such information on the employee”™s W-2 form.

For those  not wishing to divulge their Social Security numbers, they can apply for an employee identification number (EIN). Many in the room indicated they are getting ready to get an EIN immediately.

Flexible savings accounts will no longer cover over-the-counter medications beginning in 2011; by 2013, there will be a $2,500 annual cap on health care flexible savings accounts.  The threshold for itemized deductions for medical expenses will increase, too.

Employers will be mandated to gather and maintain private information about employees ”“ and don”™t leave themselves out of the equation.

“It”™s a ponderous act,” Rosenberger said. “And to make certain employers are complying the Internal Revenue Service is getting ready to hire 16,000 new people…so there is some job creation going on here.”

 

 

Provisions of the HIRE Act of 2010

The new hire must sign an affidavit stating they pass the requirements and employers must file it with the Internal Revenue Service. Employers must obtain an updated Form 941 to request the credit.
Tax credits for those employers hiring someone for 52 consecutive weeks:
Claim credits on business or personal returns on Form 3800-General Business Credit.
The amount of credit will be the lesser of $1,000 or 6.2 percent of the wages paid to the new hire.
Meet all qualifications noted to obtain the Social Security Tax Forgiveness, which allows employers to opt out of paying social security for those new hires under the Act.
The HIRE Act is in effect from March 19 through Dec. 31 and is retroactive. It may be extended through June 30, 2011.