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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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The ACA states that certain employers who have fewer than 50 full-time employees, or FTEs, could qualify for tax credits, but for an employer, determining if they qualify can be somewhat confusing and they may need a tax preparer and even a health insurance agent to assist them.

“We’re hearing anecdotally from many members the grave concern and the tough decisions they are having to make this year,” Kuhlman said. “So [business owners] have to go through these complicated, arbitrary, time-consuming calculations about tracking [an] employees’ hours and it really takes away from the real crux of whatever [their] business is.”

In addition, Kuhlman is critical of the health insurance tax levied on insurance companies yearly by the federal government. He is certain that this tax will be passed on to consumers in the marketplace in the form of increased premiums.

“Ultimately the people who end up feeling the tax are the consumers who purchase in the market. It’ll be anywhere between $350 and $500 a year in increased premiums for families,” he said.

But Buttle said that 96 percent of small-business owners have below 50 FTEs and so will not be penalized. Of the remaining 4 percent, 96 percent of those businesses already offer health coverage.

“When you’re nearing that 50 threshold, you are already offering coverage, so its a very small number of employers who are sort of on that line,” Buttle said.

The Small Business Majority has been offering information sessions to employers, educating them about the law, what it means to them, and what they should be doing to prepare. Specifically, Buttle stressed that the tax credit can be a great incentive, despite the decrease, for small businesses.

“There are some opportunities for small-business owners to take advantage of [so] it’s important to learn exactly what the law means,” he said. “If [a business owner] is on the line of should I or should I not offer health insurance, a tax credit of 35 or even 50 percent can be the sort of thing that pushes [them] over.”

But with the tax credit being reduced, at least for small nonprofits, the incentives may be diminishing. A recent report by Human Resource Executive showed that the No. 1 concern for employers is whether to cut employee working hours to fall under the 50 FTEs to avoid the penalty.

Despite the setbacks, Buttle remains optimistic that the ACA law will have a positive effect on the economy.

“We are hearing from small-business owners that the ability for them to offer healthcare is huge and…it makes them more competitive with large businesses [and] they’re able to recruit and retain better 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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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
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