As businesses begin to prepare annual tax filings next year, many small business owners across North Carolina could be shocked when they realize that a single Affordable Care Act provision is to blame for a dramatic rise in their overall costs of a job: $36,500 per employee, in fact, and up to $500,000 total!
As you know, companies of all sizes across the U.S. depend on the establishment of Health Reimbursement Arrangements (HRAs) to help individual employees better manage their health care costs while increasing the predictability of costs across their entire business. While the ACA requires companies with 50 or more employees to offer health insurance benefits, many smaller companies make a voluntary decision to help their employees offset premiums and out-of-pocket expenses through contributions to an HRA. Unfortunately, the ACA is now effectively penalizing these small business owners for doing the right thing by saddling them with a $100 per day fine for each employee receiving benefits through an HRA.
Compounding concerns around this provision is the fact that many small business owners have not been made sufficiently aware of their new compliance burden, which took effect on July 1, 2015. Such a drastic tax hike, particularly one resulting from a change that has not been adequately explained by the IRS, is an unacceptable burden to place on small businesses who form the backbone of our national and state economies. To address this issue, the NC Chamber added our support this week to this joint letter coordinated by the U.S. Chamber of Commerce. It encourages Congressional leaders from both major political parties to work together to reverse this harmful provision by enacting the Small Business Health Care Relief Act (H.R. 5447/S. 3060) before the end of the current year.
As the letter states, this is truly a “perverse” punishment levied by the IRS on small business owners who have the best interests of their employees in mind. The Small Business Health Care Relief Act has already passed the U.S. House, and has received bipartisan support from 18 Senators. The NC Chamber joins the U.S. Chamber of Commerce, and other pro-business organizations across the country, in urging our Senate leaders to act quickly to secure this important legislation for small businesses. As we continue to work alongside other stakeholders on a business plan to increase the value of health care in North Carolina, we will keep you updated on federal issues impacting your company’s health care costs.
Gary J. Salamido
Vice President, Government Affairs
North Carolina Chamber