The line has been drawn, and the government has officially shut down. Obamacare is the legislation that has divided Congress against the backdrop of the clock ticking towards the deadline to raise the debt ceiling in October.
A failure to raise the $16.7 trillion debt ceiling would force the country to default on its obligations, dealing a potentially painful blow to the economy and sending shockwaves around global markets. Potential for negotiations seems improbable as Democrats argue that negotiations would lead to further confrontations and demands, and Republicans are keeping their constituents in mind facing the upcoming congressional elections. After researching the healthcare reform at the heart of the controversy, the overall conclusion I drew is that while the intentions of the plan are good, this plan is not going to be positive for small businesses.
First, it is the common assumption that “small business” means the typical Mom and Pop store, or local corner shop. A small business is generally privately owned and operated, with a small number of employees and relatively low volume of sales. The main intent of Obamacare is to ensure that large companies are providing employees with access to healthcare. Companies with over 50 full time employees are required to provide healthcare or pay penalty of $2000 per employee. The fee is waived for the first thirty employees, to allow for some forgiveness for companies that are just barely over the limit.
That said, 96% of all firms in the United States have under 50 employees. There are tax credits given to these firms to encourage the purchase of healthcare for employees by small business owners that have less than 50 employees. This sounds good, however this tax credit is temporary, for a maximum of only six years. The credit is really not high enough to incentivize employers to immediately offer coverage and the process is complex and time consuming. Generally, the smaller the business, the better the tax breaks. Also, all of the wage thresholds set on this tax increase do not carry projections for inflation, skewing the amount of business owners into higher tax groups with time.
As a business owner, regardless of political inclination, it is crucial to understand the ways in which this new healthcare legislation will impact your business. Here are some links that provide excellent information on Obamacare in respect to small businesses. Further research is always useful when it comes to a topic that affects so many businesses, as well as their employees. These are also great resources if you or your employees are unsure as to how the new Affordable Care Act will affect you.
As a small business owner, what is your opinion on Obamacare and what measures are you taking to best adjust to this new legislation? Comment below, or tweet at us @powerlinx