Though many of Obama’s $940 billion health care legislation provisions won’t take effect until 2014, small business owners are already feeling the strain.
Tax credit: worth the trouble?
In a survey of 305 small business owners by the Small Business and Entrepreneurship council, 90% had yet to apply for tax credits available to them under The Affordable Care Act. This assistance is specifically aimed at helping small businesses who employ low- and moderate-income workers. The hope in such a provision is that the small business owner will either extend first-time coverage or maintain existing health care coverage for employees. So, why aren’t businesses taking advantage of this assistance? Forbes magazine writes that it’s because the plan is basically worthless. “Through 2013, only employers with fewer than 10 employees and average wages of less than $25,000 a year are eligible for the full 35% credit. The credit’s value decreases as a company’s workforce increases beyond 10 employees — and as its average annual salary rises above $25,000.” Some changes occur in 2014 regard the percent credit, but this assistance expires in 2016. After that, no assistance. If the company grows in size, they will become ineligible for the assistance. The decision becomes Do I hire new employees? or Do I maintain my present staff to keep the tax benefit? Those businesses who qualify for the credits have to determine if they are going to be worth the trouble.
According to a recent poll of small business owners by Discover, more than half would favor the repeal of Obama’s health care plan, and 70% note that it is difficult for them to find affordable healthcare for themselves and their employees. Will ObamaCare make health insurance less affordable? Many small business owners state that they believe so. A new report from PricewaterhouseCoopers forecasts costs for employers to rise 8.5% next year, an 8% hike from this year’s cost. Meanwhile, the cost of health care is rising, making any tax credit a moot issue.
Appeals Court strikes down ObamaCare
The 11th Circuit Court of Appeals struck down the foundation of Obama’s health care plan on Friday, August 13, 2011. The three- judge panel claim Congress overstepped its powers when it required all Americans to carry health insurance. Chief Judge Joel Dubina and Circuit Judge Frank Hull wrote in the 207-page opinion that lawmakers cannot require residents to “enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.” The 11th circuit sided Friday with 26 states who sued in order to prevent the law from taking effect. Friday’s decision propels the issue closer to the Supreme Court. Carl Tobias, a professor at the University of Richmond School of Law, is pleased with this action stating, “There needs to be a pronouncement that’s nationwide. It would be almost impossible to implement it if we have splintered decisions from different geographic circuits.” This issue is sure to remain a contentious topic in the upcoming presidential election with growing deficits at the state and national levels.
Sit and wait.
Karen Harned, executive director of the National Federation of Independent Business (NFIB) Small Business Legal Center called Friday’s ruling a “true victory for all Americans because it respects the constitutional limits of Congress’ power over all Americans.” She went on to summarize the actions that will likely be taken by small business owners across the country. “It will be incumbent on the Supreme Court to determine the ultimate future of the health care law. We look forward to the opportunity to present our case to the Court.” After Friday’s decision by the 11th Circuit, small business owners will likely sit and wait out an overarching decision.