Since I am writing this on tax day, I am reminded of the Affordable Care Act (ACA) and what it means for your small business. I want to look at some of the features that will result from the impact on small gym owners, of health coverage and collecting the indoor tanning tax.
But First A Disclaimer
This is intended to be informational and not to take a stand politically, on one side or the other. Businesses that have employees are going to have to respond and deal with the ACA and some cases of non-compliance may result in penalties. Seek professional advice from your accountant or tax attorney to get the proper coverage and reporting, at the least cost to the business.
Some Affordable Care Act Issues
This is intended to summarize and show the impact of the ACA and compliance on small businesses. For a more complete version the Small Business Administration Website is very helpful.
■ Small Business Health Care Tax Credit is aimed at small businesses with less than 25 employees who can apply for a tax credit of up to 50% of the cost of insurance.
■ Small Business Health Options Program (SHOP) is the marketplace for small employers to find a better deal on health cover. It is intended to provide a lower cost alternative. Employers must offer coverage to all employees and meet minimum participation rates. This is available for businesses with up to 50 employees currently, and that will increase to 100 employees by 2016.
■ Employer Notice to Employees of the New Health Insurance Marketplace. If you have revenue of more than $500,000 per year, you have to provide notice to all employees about the healthcare marketplace, advise them of eligibility for a premium tax credit and that they could lose their employer contribution if they chose to opt for cover from the marketplace. This has to be given at the start of employment regardless of enrollment plan status, or part time or full time.
■ Summary of Benefits and Coverage (CBC). Employers must provide a Summary of Benefits and Coverage form that explains the scope and cost of the plan they offer.
■ Limits on Flexible Spending Account (FSA). Contributions In any year the most an employee can put into an FSA is currently $2,500.
■ Additional Medicare Withholding on Wages. High earning employees >$200K have to pay higher Part A Hospital Insurance withholdings. There will be other taxes on capital gains, dividends and other types of investment income.
■ 90 Day Maximum Waiting Period means new hires are eligible for cover after not more than 90 days of employment.
■ Transitional Reinsurance Program Fees are due at a rate of $63 per employee per year in 2014 and also for two years after that. It’s supposed to help cover the high cost to insurers of getting the marketplaces up and running.
■ Workplace Wellness Programs are now to be incentivized, with employees receiving rewards for meeting various fitness targets. Should be a good one for the gym and fitness business. Who knows? It may provide some sort of opportunity for the industry to consult with other small businesses that need wellness program services.
■ Information Reporting by Self-Insured Employers new rules for reporting by companies with 50 employees or more. So if you grow beyond that level you are going to have to do another type of reporting to the IRS on each covered individual, beginning in 2016.
Paying The Price For Tanning
The IRS Website provides a very comprehensive FAQ on what you have to report and collect if you provide tanning services. The basics of it are covered here. For more complete information see the IRS Website.
■ Ultraviolet (UV) indoor tanning services are taxable, spray-on and lotion based tanning are not
■ Fitness centers that provide UV tanning must keep separate records and provide them to the IRS
■ Medical Phototherapy is exempt from the tax if it is performed by a licensed medical practitioner on medical premises
■ Even tax-exempt institutions that provide tanning services, like university gyms, are required to collect the tax
■ Fitness Center membership fees are not subject to the tanning tax as long as tanning is just a small part of what they do
■ Any business that provides UV tanning is responsible for collecting and report the taxes to the government quarterly on IRS Form 720
■ The indoor tanning services tax is 10% of the part of fees and payments that goes toward tanning services
Over to you…
How has the ACA affected your fitness business?