WASHINGTON – On the day before the six year anniversary of the enactment of Obamacare, small business owners and experts told Congress that one of the law’s key tax provisions has failed to help employees of small companies to get affordable health insurance coverage as promised. As the April 15th filing deadline for federal income taxes approaches, many small business owners are expressing frustration as they try to provide health insurance to their employees under the confusing, costly new tax credit scheme.
“The small business health insurance tax credit was created with the stated purpose of making it easier for small business owners to provide health benefits for their employees,” said Subcommittee on Economic Growth, Tax and Capital Access Chairman Tim Huelskamp (R-KS). “The numbers show, however, that this credit simply did not deliver, and from what we have heard today we can see why. This credit proved to be complicated, confusing, and costly to implement. It is yet another broken promise to the small business community.”
KEY WITNESS TESTIMONY
“I understand that most tax credits are designed to incent or change behavior and - to be clear - we have always provided health insurance for our employees. But the fact is prices have increased so dramatically year after year that we may not be able to continue to provide health insurance in the future,” said Harold Jackson, the Executive Chairman of Buffalo Supply, a small business based in Lafayette, Colorado. “Because we are ineligible, this tax credit does not help me in any way to provide affordable health coverage to my employees now. And unfortunately, it will not encourage me to do so in the future - if and when - I may be forced to stop offering insurance because of prohibitively escalating costs.”
“Based on my experience, I think part of the problem is that the rules for the tax credit are so confusing that small businesses cannot assess benefit of the tax credit without hiring outside counsel. Ultimately, any changes should not only increase the tax benefit to help small businesses provide health insurance for their employees, but must be simple and easily understood,” added Jackson.
“While I would like to testify today that my company has been able to benefit from the Small Business Health Care Tax Credit, that is unfortunately not the case because we are ineligible…” said Michael Ricco, the Quality Manager of AEEC, LLC, who testified on behalf of the U.S. Women’s Chamber of Commerce. “We, as a small business, want to do the right thing and provide health care coverage for our hard-working employees."
“Small business owners rank the cost of health insurance as their most severe problem in operating their business out of 75 potential issues, with 56 percent of small business owners finding it a “critical” problem,” said Holly Wade, the Director of Research and Policy Analysis for the National Federation of Independent Business (NFIB) Research Foundation. “The high cost of health insurance is the main reason owners do not offer employer-sponsored health insurance and the main reason owners discontinue providing the benefit. And for those offering, many owners annually confront the arduous task of adjusting profit expectations, insurance plans, cost-sharing and other mechanisms to help absorb often erratic changes in total premium costs.”
You can watch video of the full hearing HERE.
- In a recent piece titled “Obamacare’s Small Business Bust,” American Enterprise Institute (AEI) scholar Thomas P. Miller described how the law’s tax credits for small business and Small Business Health Options Program (SHOP) exchanges have “failed miserably.”
- Two recent studies from the National Small Business Association (NSBA) and the National Federation of Independent Businesses (NFIB) have also demonstrated the burden of Obamacare on America's small businesses.