Patient Protection and Affordable Care Act

The Patient Protection and Affordable Care Act ("PPACA"), along with the Health Care and Education Reconciliation Act ("HCERA"), the two acts comprising “Obamacare,” will soon drastically alter the health care industry.  PPACA, or as now abbreviated ACA, will also have an impact on both publicly traded and closely held businesses and their owners.

The Individual Mandate under Section 5000A of the Internal Revenue Code, which was recently upheld by the Supreme Court in NFIB vs. Sebelius, as well as Health Care Exchanges to be established under Sections 1311(b) and 1321(c) of PPACA, will affect nearly all individuals in one way or another.

ACA’s “employer mandate” penalties under Section 4980H of the Code will change the calculus for employers with at least 50 employees.   These “applicable large employers” will have to either offer “minimum essential coverage” to their full-time employees or pay an “all employee” or “per-employee” penalty.  Whether employers decide to offer this minimum essential coverage will determine what penalty regime they are subject to, and whether their employees are eligible to seek health insurance through the new Exchanges and thereby receive generous premium tax credits and cost-sharing reductions.  Of the many new revenue provisions contained in the ACA, the new tax on net investment income under Section 1411 of the Code, sometimes called the New Medicare Tax, will likely have the broadest near-term impact on tax planning considerations for closely held business owners, especially for passive activities, and it will become effective on January 1, 2013. 

Since passage of this massive legislation, Tom Nichols of our firm has been at the forefront of the development of the parameters and implementation of this new law as it relates to business owners.  He has given speeches on this topic to thousands of small business owners, accountants, attorneys and other professionals, including major national Tax Institutes and other presentations in New York, New Orleans, San Diego, Washington, D.C., Minneapolis and other cities, as well as numerous panel presentations with government guests trying to determine the parameters and administrative rules for this new law, including an upcoming panel presentation for the American Bar Association Tax Section in Orlando, Florida in January, 2013, a recent Webinar for CCH and an upcoming presentation for Professional Education Broadcast Network, also in January, 2013.

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