Losing Small Business to the Affordable Care Act

By admin • 26 August 2015 • Uncategorized


The debate over the Affordable Care Act (ACA) boils down to one thing: Do the costs outweigh the benefits?  Because of its crippling outlay, small business owners allege absolutely not. Ironically, the scary price tag is not for employee health care, but rather penalty payment for respectfully trying to help workers get needed coverage. Apparently, our system needs medical attention too.

For years, small business owners provided the only health insurance support they could afford – a contribution to help employees pay premiums for individual or family health insurance policies. Alternatively, employers helped employees finance direct payment for medical services. Now a new IRS mandate issued in September 2013 punishes this financial help that was historically pre-tax based without penalty.

Any employer that reimburses or pays for employee individual health premiums is deemed an illegal group health plan and threatened with $36,500 in IRS fines annually. The penalty applies whether the reimbursement is determined before-tax or as an after-tax contribution. Furthermore, under Obamacare it is more than 18 times greater than the $2,000 employer-mandate penalty for not providing qualifying health insurance for employees. Employers with fewer than 50 workers are not exempt, as they are from the employer-mandate penalty. While strengthening small business is the supposed focus for 2015 America, we are still witnessing small businesses crumble and workers needlessly suffer.

Senator Chuck Grassley of Iowa is all too familiar with the problems created under Obamacare’s “market reforms” and he has had enough. “The dentist or the farmer who has just a few employees and has no obligation to offer insurance in the first place could be subject to as much as $100 per day per employee as a penalty for helping their employees purchase health insurance,” Grassley states. And while the government considers this method of employer assistance a “group health plan,” it doesn’t meet Obamacare requirements or cause the administrative hassles of setting up costly group plans constructed by Human Resources departments. “This is the kind of problem Obamacare created because it was poorly thought out,” convicts Grassley.  

In response to several businesses being caught off guard by this IRS notice, Grassley proposed an amendment to the Senate Finance Committee on January 20, 2015, requesting small businesses be given the right to provide assistance to their employees for health coverage. The Grassley Amendment squashes the exclusion of workers who 1) have fewer than three years of service to the company; 2) are under age 25; and 3) are part-time or seasonal employees.

Not surprisingly, Grassley’s amendment is actually an addendum to the Hire More Heroes Act of 2015. That legislation incentivizes companies to hire more veterans by ensuring they don’t count against a 50 employee threshold requiring employers to offer health insurance when veterans already have medical coverage.

Right now, Grassley’s bill awaits congressional action in the Senate, as does similar legislation by Rep. Charles Boustany (LA). In the meantime, patriotic, budget-conscious America sits tight hoping Congress champions its engine of job growth for our small businesses.

Only time will tell whether these items become law. You can help move the needle by contacting your Senators and House Representatives asking them to pass these needed pieces of legislation.

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