WorldWide Drilling Resource

31 WorldWide Drilling Resource ® SEPTEMBER 2013 Drilling Into Money Not Boring by Mark E. Battersby The Small Business Health Tax Credit Lives Lawmakers are attempting to repeal it, businesses are suing to prevent its implementation, and local governments and unions continue their efforts to be exempted from the massive and con- troversial “Affordable Care Act” (ACA), the health care “reforms” enacted in 2010. More recently, whether because of pol- itics or economic realities, the Obama Administration announced it is post- poning for a full year, from 2014 until 2015, the Act’s “Employer Mandate”. This is the requirement that employers with more than 50 employees provide health insurance to their employees or face stiff penalties. Fortunately, while the complexities increase and confusion mounts about the ACA, many drilling professionals appear to be overlooking tax credits and other sweeteners for employers which were created as part of the ACA and already in effect. The Internal Revenue Service is encouraging small businesses to ex- plore and, if qualified, claim a unique health insurance coverage tax credit. The credit was created for eligible small businesses which either maintain their current health insurance coverage or begin offering health insurance cover- age to their employees. Small employers (no more than 25 employees and average wages below $50,000 annually) are eligible for this federal tax credit, a direct reduction of the drilling operation’s tax bill, for up to 35% of the amount spent on health insurance for their employees. The full amount of the credit is, however, avail- able only to an employer with 10 or fewer full-time equivalent employees (FTEs) and whose employees have average annual full-time equivalent wages from the employer of less than $25,000. These wage limits will be indexed to the Consumer Price Index for years beginning in 2014. Self-employed drilling professionals, including partners and sole proprietors, 2% shareholders in S Corporations, and 5% owners are not treated as employ- ees for purposes of the Small Employer Health Insurance Credit. In fact, a spe- cial rule prevents sole proprietors - and their family members - from receiving the credit. In another announcement, small businesses will not be able to access the health insurance “Marketplaces” until 2015, thus limiting the affordable options available. The so-called “Individual Mandate,” requiring all individuals to have health insurance remains, however. Are you ready? Mark Mark E. Battersby may be contacted via e-mail at admin@ worldwidedrillingresource.com