Committee Examines Effects of Obamacare’s Business Aggregation Rules
The House Small Business Committee today examined the health care law’s application of the business aggregation rules and the concerns they raise for small businesses.
The health care law requires businesses that employ 50 or more full-time or full-time equivalent employees to offer health insurance to their full-time employees. One critical issue is the definition of “employee,” while an equally important issue is determining which employees are attributed to the business. The answer may be simple for one business with a single owner. However, when an individual shares ownership of multiple entities or with multiple owners, some of them family members, the answer is less clear.
Under the presiding chairmanship of Rep. Chris Collins (R-NY), Chairman of the Subcommittee on Health and Technology, the Small Business Committee heard the testimony of concerned small business owners, examined the administration’s process of determining whether businesses are considered single or multiple entities under the health care law, and heard suggestions on what changes to the rules could be considered to reduce confusion.
“Small businesses need to know exactly what they have to do to comply with the health care law, and what it is going to cost,” said Chairman Collins. “Even at this late date, too many small businesses still do not have those facts. In particular, the business aggregation rules cause uncertainty among small businesses. The rules can be complicated and confusing, and small businesses need better answers and they need them quickly.”
Materials from the hearing are available on the Committee’s website HERE.
Deborah Walker, CPA, National Director, Compensation and Benefits, Cherry Bekaert, LLP, Tysons Corner, VA, said, “…[T]he mechanical tests used for qualified plan discrimination testing are overly complex and understood for only a limited number of tax professionals. A small business would not be able to apply those rules without professional help and many of the advisers to small business would not be familiar with the rules.”
Ellis Winstanley, Chief Executive Officer, Tradelogic Corporation, Austin, TX, testifying on behalf of the National Restaurant Association, said, “The impact of the aggregation rules, and hence our status as an applicable large employer, will have an impact on each of our businesses. Simply, the cost of doing business for each will increase, yet they must be able to stand on their own. Labor costs are typically one-third of a restaurant’s expenses. Operators only have a finite dollar amount to spend on labor costs given thin margins, including employee benefits such as health insurance coverage, and must manage these costs closely to remain viable.”
Donna Baker, CPA, Donna Baker & Associates, Adrian, MI, said, “These rules could cause employers to delay growth, manipulate ownership percentages or limit employees to less than 30 hours, discourage small businesses from investing in other businesses, and require health insurance coverage in industries where this is not the norm which will affect a business’s ability to compete.”###