Posted by Brian Snyder
After an extensive amount of work and revision, the House passed the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, which President Obama signed into law in March 2010. These two acts are collectively referred to as the 2010 health care reform legislation. Health care reform has been at the center of the Obama administration since the president took office. This much most people already know. Figuring out how these changes will relate to you personally and to your organization can be very confusing. Somewhat like being on a never ending bridge and not knowing what is on the other side. The effects of this legislation on nonprofit organizations are intended to make it both more affordable and more appealing for nonprofits to provide their employees with health care benefits.
Stipulations within the bill provide a payroll tax credit for small nonprofit employers (those with no more than 25-full time employees and average wages below $50,000) to help offset the cost of providing health care coverage to their employees. For tax years 2010 through 2013, qualified non-profits will be eligible for a credit of up to 35% of the employer’s contribution toward the employee’s health insurance premiums if they pay at least 50% of the premiums. The amount of the credit increases to 50% of the costs beginning on January 1, 2014. The available credit is also increased for employers with 10 or fewer employees and average wages of less than $25,000.
Additionally, nonprofits that establish wellness programs may be eligible to receive grants for up to five years. The legislation also provides for nonprofits to be included in Health Insurance Exchanges which will allow for employers with fewer than 100 employees to pool their buying power and reduce administrative costs by purchasing insurance through an exchange.
However, the health care legislation might also have a negative impact on nonprofit organizations as certain employers with more than 50 employees that do not offer health insurance may incur a penalty if at least one of the nonprofit’s employees must rely on subsidies to buy insurance.
The health care reform legislation will affect substantially all nonprofit organizations. To gain a better understanding of its impact on your organization, reach out to your accounting professional sooner rather than later.