Tarpley & Underwood
Financial Advisors, LLC
COULD SMALL BUSINESSES COPE WITH MANDATORY HEALTH INSURANCE?
What Would They Have to do if Health Care Reforms Pass?
As for the House version, it asks self-employed individuals to buy coverage or pay a tax equivalent to 2.5% of the difference between their adjusted gross income and the tax filing threshold (which was about $9,000 in 2008). Sliding-scale subsidies would be offered to self-employed Americans so that they would not have to spend more than 11% of their income on health coverage. As in the Senate bill, insurers could not wiggle out of providing coverage by citing pre-existing medical conditions.3
What would the long-term impact be? In the bleakest scenario, businesses would be hard pressed to offer workers decent wages or decent health coverage. Nationally, fewer and fewer companies are offering health benefits in the first place. A 2008 National Small Business Association poll found that just 38% of small companies could afford health plans at all, compared to 67% of small businesses in 1995.4
A sunnier outlook comes from the Small Business Majority, a nonprofit advocacy group founded by small business executives. Its report examined three scenarios using different levels of employer tax credits and employer payments. It concluded that the proposed health care reforms could save small businesses as much as $855 billion, and preserve as many as 128,000 jobs that would have been lost because of runaway health insurance costs.4
Stay tuned. Will Congress give business owners more of a break? Could penalties be reduced, or requirements eased? Will fewer businesses offer health plans, assuming that their employees could qualify for federal subsidies toward individual health insurance? At this point, there are more questions than answers – but with the median health insurance cost for U.S. businesses already at about 11% of payroll, any increase would be unkind.2
These are the views of Peter Montoya Inc., not Tarpley & Underwood Financial Advisors, LLC, and should not be construed as investment advice. Tarpley & Underwood Financial Advisors, LLC does not provide tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your financial professional for further information.
Source: U.S. Census Bureau
Citations.
1 nytimes.com/2009/07/18/health/policy/18health.html?hp [7/17/09]
2 dallasnews.com/sharedcontent/dws/bus/stories/DN-localhealth_16bus.ART.State.Edition2.4bde27c.html [7/16/09]
3 businessweek.com/smallbiz/content/jul2009/sb20090716_683119.htm [7/16/09]
4 cbsnews.com/stories/2009/06/16/politics/main5092451.shtml
[6/16/09]
[6/16/09]
