smallbusiness.house.gov

Rep Cmte Small Business


Contact: Alexandra Haynes (202) 225-5821

Small Business Fact Sheet: How the Health Care Overhaul Affects Businesses in America

Washington, Mar 30 -

In these difficult economic times, our government needs to take every step to make sure small businesses can thrive.  These employers have created seven out of every ten jobs in recent decades, and with unemployment still hovering around ten percent, it is clear that small businesses will play a critical role in stabilizing our economy. 

However, instead of encouraging job creation and helping small businesses, the health care overhaul that President Obama signed into law will destroy American jobs.  This new law will increase government intrusion in small businesses and pile hefty regulations on top of impossible mandates, making it all but impossible for employers to expand their operations or hire new workers.


Key facts about the impact of the new health care law:

• Under the law’s mandates, employers who cannot offer “acceptable” health care coverage to their employees must pay a “fair share” tax of $2,000 per employee – more than double the $750 tax initially proposed. 

• This employer mandate applies to both full- and part-time workers, which could make it more difficult for small businesses to hire additional employees or offer competitive wages.

• Individuals who make more than $200,000 and families earning over $250,000—including many small-business owners—will have to pay higher Medicare payroll taxes and a new 3.8 percent tax on unearned income such as dividends and interest.  These thresholds are not indexed for inflation, so more people will become subject to them over time.

• The health care takeover imposes new restrictions on Health Savings Accounts (HSAs), Medical Savings Accounts, Flexible Spending Arrangements (FSAs), and Health Reimbursement Arrangements (HRAs). These new restrictions and tax increases will limit employers’ ability to offer affordable benefit plans that best meet their workers’ needs.

• This law does nothing to address the skyrocketing cost of health care.  According to CBO, premiums in the individual market could actually rise by as much as $2,100.

By the numbers:

• $569.2 billion – Tax increases imposed by the new health care law and reconciliation bill. 

• 16,500 –The estimated number of IRS auditors, agents and other employees that may be needed to collect the hundreds of billions in new taxes levied on the American people as a result of the new health care law.

• 44 – The percentage of all workers employed by small businesses which could be subject to the employer mandate; that’s 26.4 million people and 22 percent of the entire private sector workforce.

• 219,961 - Number of small businesses which could be subject to the employer mandate.

• $982 billion - Total amount of wages paid to employees working at small businesses which could be subject to the employer mandate and associated taxes.

• $52 billion - The total amount of new taxes employers will pay because of the employer mandate taxes.