Small Businesses Brace for Healthcare Law’s Effects
For better or for worse? Wrestling with tax credits, penalties, and tough decisions.
March 23, 2013 - 12:25 am
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.”