Health Plans and Small Business Taxes: a San Francisco Perspective

Filed in CPA Blog by on January 7, 2016
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Small businesses in San Francisco, generally speaking, care about their employees. These days nothing is more important than health care benefits when one looks at the benefits portfolio your small business can offer to your employees. Most employees, especially your more educated, “knowledge” workers, require health care from their employer. Without it, you are simply not a competitive employer. We work with many San Francisco startups and small businesses in their tax and financial planning.

The Affordable Care Act and Tax Implications for Small Businesses

Health Care Issues for Small BusinessesIn this capacity, we can act as an adviser on how to structure employee benefits. While these might be issues such as compensation, retirement account funding, and even stock options in the case of many startups, let’s focus for a second on health care. With the rollout of the Affordable Care Act (ACA), many employers are now feeling the brunt of these important changes. And, of course, they have tax implications.

Our December Tax Bulletin has an interesting article entitled, “Put Cadillac Health Plans on your Road Map.” It points out that so-called “Cadillac Health Plans,” which are plans that have relaly good benefits will be subject to taxation in 2016. The thresholds for high-cost plans are currently $10,200 for individual coverage and $27,500 for family coverage. This might sound like a lot, but when you look at the true costs paid by an employer for health care for your employees, costs can add up rapidly. The “Cadiallac Tax” is a 40% excise tax on any excess benefit provided to an employee, and it is paid for buy the employer. To make matters more complicated, in some cases the insurance company will pay the tax, and in others the employer. ┬áTake a look at our December Tax Bulletin, and if you are a small business in San Francisco, reach out to us for a consultation on your employee benefits and their tax implications.

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