Seven months after the national health care bill (the PPACA) became law, every week brings new surprises to small business. Recent weeks have seen insurers fleeing the uncertain new market, large insurance premium increases, special treatment of some companies, but not others, and implementation delays.
Small businesses tell the National Federation of Independent Business that they fear the PPACA’s impact on their money, time, and ability to plan for the future. Small business is the principle source of new jobs in America, and because of this new law, an untold number of would-be job-creating startups will never see the light of day. Those who brave the new wilderness will face endless questions. Answers — if there are any — will generally begin with: Schedule some time with my accountant, broker or attorney.
The PPACA carries a multitude of taxes, penalties, and administrative obligations — many triggered by obscure traps buried in the law. Under the right circumstances, adding a single new employee can slam a firm with tens of thousands of dollars in annual penalties. Under different circumstances, selling a family’s rental property will trigger new taxes on the business income. In one of the law’s stranger twists, a business may have to pay thousands of dollars in annual penalties because an employee’s spouse’s elderly uncle moves into their house. Seriously.
The PPACA is a Rubik’s Cube — turn one piece, and everything else changes. It will be tough enough for accountants, brokers and attorneys to keep up with the changing rules. It will be impossible for a business owner to keep up without a steady stream of advice. Result? Schedule some time with my accountant, broker or attorney.
Consider some of the questions a business will face:
How much higher will the PPACA push my insurance premiums this year or next? Can my business keep its old insurance policy? Will my insurer be in business next year? If I switch to a new plan, will my employees’ doctors be willing to keep them as patients? Schedule some time with my accountant, broker or attorney.
What am I supposed to tell my employees when they ask why their neighbors get heavily subsidized policies through the government exchanges and they can’t? Should I drop insurance altogether and let them buy insurance in the new exchanges? Should I incorporate my business (and thereby suffer double-taxation) because the PPACA increases taxes on owners who report business income on their personal tax returns? How much extra cost will fall on me if my company grows past 50 employees? Can I split my business into two businesses now in order to avoid that 50-employee problem in the future? If I want to split it later, will the IRS refuse to recognize the split? Should I buy machines instead of hiring people? Should I fire my full-timers and replace them with part-timers? Should I outsource? Schedule some time with my accountant, broker or attorney.
How do I add health care benefits to my employees’ W-2s? And why did the IRS have to delay this requirement for a year, given that it is just about the simplest task in the whole law to implement? How do I administer (or circumvent, if legal) the nightmarish Form 1099 reporting requirement? (Or will it be repealed first?) How do I calculate and obtain the short-lived small-business tax credit? What do the new exchanges mean? How many thousands of dollars in penalties will I pay per year if one of my employees gets a government subsidy to purchase insurance?
Schedule some time with my accountant, broker or attorney.
How am I supposed to educate myself on this constantly shifting regulations? How do I explain to my employees why their flex plans no longer cover over-the-counter medicines? How did I make them understand that this change and other changes are not my fault? Why does the government exempt some companies but not others from the law’s costly requirements? How am I supposed to know when and how to apply for such exemptions? And how can I compete if the government gives my competitor, but not me, an exemption? Schedule some time with my accountant, broker or attorney.
After dealing with all of these health care questions (and more), only then can the business begin thinking about things like how to produce a quality product, how to get that product to customers, and how to survive a deeply troubled economy. (No doubt, some of the business owners in the new Congress will ponder these questions when bills begin emerging to undo the damage caused by this law.)
Dr. Robert F. Graboyes is Senior Healthcare Advisor at the National Federation of Independent Business, the country’s largest small-business association. NFIB and 20 state governments have sued to declare the PPACA unconstitutional.