Obamacare Will Crush Small Businesses -- Opinion
Unless the small business you own or work for is in the health care industry, the Patient Protection and Affordable Care Act is the biggest tax and headwind facing your business or job.
Buried within 2,700 pages of the ACA is a requirement that businesses provide all employees with "acceptable" health insurance coverage. The ACA also exempts businesses with 49 or fewer full time employees. Part-time staff hours are added to determine full-time equivalent employees.
Businesses with 50 or more people will face a $2,000 non-tax-deductible penalty for every employee over 30 if employers don't offer approved insurance. Even with a health insurance offering, if any employee receives a government subsidy for their insurance, the employer will receive a $3,000 penalty for each employee. About 100,000 employers and 4 million employees will be impacted.
For job seekers and small business owners, the most damaging aspect of this is the discouragement for businesses with less than 50 employees not to grow beyond 49 employees. Companies currently encounter increasing accounting and government compliance on reaching 50 employees, and I am familiar with this situation on a personal level.
I once faced a choice of adding employees to my business of just under 50 people. My accountant recommended I either hire temps or not hire a 50th person as a result of the costs and additional regulations faced by companies with 50 or more.
The additional burdens I faced on my business are nothing compared to the costs ACA will impose. Although the ACA doesn't directly make it illegal to hire the 50th person, if something looks like a duck, walks like a duck, and quacks like a duck . . . it may not be a duck, but it might as well be a duck, because the net result is the same.
Not everyone is a loser from ACA. Some companies are expected to gain new customers, but in the long run I believe they will end wishing they didn't make a deal with the devil (Washington).
From an employee and business point of view, there is no difference between a law making it illegal to hire a 50th employee and the ACA. Some will say "as long as a business offers health insurance there's no penalty." This is only partially correct. It's not enough to offer health insurance; businesses are required to offer "the right insurance for every single employee" because penalties can occur if even one employee's insurance coverage isn't "perfect" in the eyes of the government.