The Small Business Health Relief Act (S. 1049), introduced by Sen. Jon Kyl (R-AZ), seeks to repeal the Health Insurance Tax, one of the largest tax increases contained in the Patient Protection and Affordable Care Acthealth care law, and the employer rules that stipulate how small businesses can purchase insurance for employees.
"Business owners across New Hampshire have told me that the tax increases and burdensome mandates that were enacted as part of Obamacare are driving up their health care costs and discouraging them from hiring new workers," said Sen. Kelly Ayotte, R-New Hampshire, according to Insurance News Net . "I'm committed to fully repealing the health care law, and this legislation is an important step toward eliminating some of its most egregious provisions, Ayotte continued."
The Small Business Health Relief Act that Sen. Kyl proposes would:
- Repeal the Health Insurance Tax (HIT): HIT represents a tax increase of $87 billion on American families and businesses, and will affect nearly 90 percent of the nation's small businesses. According to the Joint Committee on Taxation, repealing the HIT could "decrease the average family premium in 2016 by $350 to $400.
- Eliminate employer mandate: The employer purchase provision requires small businesses to buy insurance or pay a penalty and dictates how much they must purchase. The SBHRAseeks to remedy the PPACA's requirments which force employers to spend money they don't have, reduces flexibility and choice, and raises employer costs. According to one study, nearly 1/3 of employers said their company is likely to stop offering health insurance to employees in 2014 when the provision kicks in.
- Lift restrictions on Flexible Spending Accounts: Obamacare caps annual contributions to consumer-driven health plans at $2,500, effectively limiting the amount of money that consumers are able to save and set aside for health expenses and potentially forcing consumers to pay more out of pocket costs. S. 1049 would repeal this cap.
The SBHRA legislation is supported by the U.S. Chamber of Commerce, the National Federation of Independent Business (NFIB), and the National Taxpayers Union.
"The policies in the health care law will crush small businesses with new costs and uncertainty. The small-business community would like to thank Senator Kyl for introducing the Small Business Health Relief Act to help fix some of the worst parts of the law,” said NFIB president and CEO Dan Danner. “This bill addresses the top concerns of small businesses, and it will help them get back to creating jobs and investing in their businesses.”
According to Brandon Greife,Federal Government Affairs Manager for the National Taxpayers Union, "The Small Business Health Relief Act would address some of the most egregious parts of PPACA until full repeal can be accomplished. Among the many positive changes made by this legislation is the elimination of section 9010, which imposed a new fee on health insurance providers that would inevitably be passed on to consumers. The Joint Committee on Taxation estimates that removing this fee will save the average family $350 to $400 each year in premium costs, Greife added."
Greife wrote to Sen. Kyl in support of the bill saying, the SBHRA would "also repeal PPACA’s employer mandate, which penalizes businesses that fail to offer government-approved insurance plans. This ill-conceived provision promises to have numerous unintended consequences as businesses attempt to save money by either pushing workers into government-run exchanges or avoiding extra insurance costs by refusing to hire new workers. Doing away with these perverse incentives allows employers to focus on the job creation that is desperately needed to jump-start our economic recovery."
PPACA's small business tax credits:
Because the tax credits below target a small sampoling oif small businesses, the business groups quorted above see the PPACA and the HIT as largely a tax increase.
- The PPACA includes tax credits that decrease as the number of employees approaches 25 and as average annual wages approach $50,000.
- To qualify for the credit, an employer must pay at least half the premium for each employee. The percentage paid by the employer should generally be uniform for all employees, although special provisions will apply when a small employer offers its workers a choice of health plans. Since the law was enacted in March 2010, and employers may not have had time to adjust their policies, the Internal Revenue Service (IRS) in 2010 allowed employers who paid at least half the premium to qualify, even if the percentage of premium paid was not uniform across their entire work force.
- From 2014 on, the maximum credit will increase to 50 percent (35 percent for taxexempt employers). However, coverage will have to be purchased through one of the new state-based health insurance exchanges. The credit will only be available to any employer for two consecutive tax years after 2013.
