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Small Businesses Brace for Healthcare Law’s Effects

For better or for worse? Wrestling with tax credits, penalties, and tough decisions.

by
Tricia McCarter-Joseph

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March 23, 2013 - 12:25 am
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One of the tax incentives under the Affordable Care Act that would allow small nonprofit businesses to claim a 35 percent tax credit in 2014 has been slashed by 8.7 percent, according to the Internal Revenue Service.

In addition, in the same week that the sequestration cuts took effect, the House of Representatives passed a continuing resolution to deny funding to key agencies associated with implementing their portions of the healthcare law.

Whereas the Democratic-controlled Senate continues to keep at bay repeated GOP attempts to withhold funding, the tax credit is a setback for proponents of the ACA, slated to take full effect in 2014 and celebrating the third anniversary of its signing Saturday. Currently, hundreds of business owners are trying to make decisions on whether to offer health insurance to their employees in order to avoid penalties under the law, or cut work hours and even jobs altogether.

Failure to offer affordable health insurance to employees could cost some business owners thousands of dollars in fines depending on whether those employees receive federal insurance subsidies.

“Shaving valuable dollars off a healthcare tax credit for small employers is more than disappointing,” said Rhett Buttle, national outreach director at the Small Business Majority, a research advocacy organization that supports the health law. Blaming lawmakers for their “self-imposed deadline,” Buttle said that many other critical small-business programs and incentives are also slated for cuts.

“This is not what small businesses need right now,” he said.

Kevin Kuhlman, manager of legislative affairs at the National Federation of Independent Business and an opponent of the ACA, is making time to educate small-business owners about the impact the law will have on their businesses. The NFIB is currently trying to repeal the law, and lobbying to gather at least 30 congressional co-sponsors.

Kuhlman said that though the law takes effect next year, small-business owners must grapple with very important decisions this year in preparation for the changes.

This year small employers must first determine whether their business has the potential to be penalized based on their employee size and the amount of hours each employee works. If employers offer health insurance, it must be affordable, or 60 percent of the actuarial value of the insurance must be covered by the employer. If employers do not offer insurance, they will be able to purchase policies through a new health insurance marketplace set to open next year, but employers should research what type of policies they may need for their employees.

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Top Rated Comments   
I wonder if any members of Congress from either party have an idea of what goes into running a small business and how thin the profit margin is? Unless one has been involved in operating a new or small enterprise, the challenges are daunting. Many people read that a small business generates $5. million dollars in revenue a year and actually believe that is what the owner takes home. In fact, after equipment costs, license fees, lease fees, emplyee costs for FICA, health insurance, salaries and cost of sales, the owner if fortunate, will realize a net profit of 5-10%. Yes, it is a handsome reward when calculated from $5. million dollars or so, but chances are the owner is working 80-100 hours per week to make it. And now he/she has to deal with the new Health Care mandates? Between 80-85% of new businesses fail. The new Health Care Act going into full force in 2014, will not help. But again, how much does Congress really know about running a business?
1 year ago
1 year ago Link To Comment
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All Comments   (3)
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What's going to happen is very simple: businesses, and self-employed owners, will be forced to drop insurance in order to stay afloat. The penalties and other surprises that keep cropping up from Obamacare will still probably get them in the end though. There is simply no way business and individuals can keep up with premiums that keep doubling every few years because of the mandates politicians have forced on insurance companies.
1 year ago
1 year ago Link To Comment
I wonder if any members of Congress from either party have an idea of what goes into running a small business and how thin the profit margin is? Unless one has been involved in operating a new or small enterprise, the challenges are daunting. Many people read that a small business generates $5. million dollars in revenue a year and actually believe that is what the owner takes home. In fact, after equipment costs, license fees, lease fees, emplyee costs for FICA, health insurance, salaries and cost of sales, the owner if fortunate, will realize a net profit of 5-10%. Yes, it is a handsome reward when calculated from $5. million dollars or so, but chances are the owner is working 80-100 hours per week to make it. And now he/she has to deal with the new Health Care mandates? Between 80-85% of new businesses fail. The new Health Care Act going into full force in 2014, will not help. But again, how much does Congress really know about running a business?
1 year ago
1 year ago Link To Comment
Most of them are lawyers so no, they don't know what it takes to run a business. They certainly do know a lot about wrecking them though.
1 year ago
1 year ago Link To Comment
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