Educating your clients in an uncertain health care environment
In your role as a CPA, you’re a trusted resource for your clients and that means it’s important for you to keep abreast of all regulations that could potentially impact them.
Amidst a never-ending to-do list, keeping up with regulations is a must—and in today’s regulatory environment, few things are more uncertain and impactful than health care reform.
While the uncertainty with regards to healthcare continues, the current regulations set forth under the Affordable Care Act still apply to small business owners and all Americans. This means that Applicable Large Employers (ALEs)—generally defined as companies with 50 or more full-time employees, including full-time equivalent employees, in the previous year—must:
• Offer adequate and affordable health insurance coverage to full-time employees and their dependents or potentially be assessed a penalty.
• Continue to file with the IRS and furnish to applicable employees timely and accurate annual information returns relating to the health insurance that the employer offers to its full-time employees.
• Report the cost of certain employer-sponsored health benefits on their W-2 forms (if they filed 250 or more W-2s in the previous year).
• Provide written notice to all employees about health coverage options, including information about the existence of a health insurance marketplace and a description of services provided by the marketplace.
Those points alone are enough to make a small business owner’s head spin, but many don’t know about some of the alternative health care options that may better fit their needs and those of their employees than traditional plans. For example, a Consumer-Driven Health Plan (CDHP, including Health Savings Accounts and Health Reimbursement Arrangements) may even save small business owners money—or at the very least, allow them to better control healthcare costs.
How do you go about recommending these types of plans to small business clients who would rather not put any additional time into thinking about insurance? Stick to the potential benefits:
• Contributions are made pre-tax, reducing gross income and resulting in tax savings for the employer and/or employee, depending on the CDHP.
• Unused contributions may be carried over to future plan years in terms of an HSA and at the employer’s discretion in the case of an HRA.
• Distributions are tax-free for qualified medical expenses.
• Any interest or earnings from account assets are also tax-free.
• Certain CDHPs may be transferred between employers, making the ability to roll funds over from year to year even more valuable.
Continuously educating your small business clients on the different insurance options available to them can help them feel more comfortable choosing the options that will best serve their employees and their business, helping solidify you as their trusted ally in the complex regulatory environment.