Small Business and Health Care Reform

First, a word of caution: wait. Wait and see what transpires in health care reform. Whatever I write today will probably change this year, next year, or the year after. The Patient Protection and Affordable Care Act, better known as Obamacare, is being challenged by most states. The latest kerfuffle was initiated by the Thomas More Law Center. It filed suit because the law stipulates that people who choose not to participate can be taxed under the Internal Revenue Code.

Did you get that? If you do not want to engage in commerce, in this case the purchase of a product of insurance, the government has the power to tax and punish you. Not exactly freedom of choice, is it? One of the dissenting judges in the Sixth Circuit said, "If the exercise of power is allowed and the mandate upheld, it is difficult to see what the limits on Congress's Commerce Clause authority would be." (Italics mine.)

Indeed.

In January 2011 federal judge Roger Vinson quoted President Obama declaring in 2008, "It a mandate was the solution, we can try that to solve homelessness by mandating everybody to buy a house." Clearly the President uses flexible thinking when it's pet project. Nevertheless, 27 states have sued over the Act. At heart lies the right of states to determine for themselves what their citizens can do. Never before has anyone suggested that the federal government can force people to purchase something against their will.

The egregious behavior only begins there. How would you like to be the enforcer of this twisted law? As a business owner, you would be. Here is the mechanism, as outlined by the Congressional Budget Office that estimates revenues of $36 billion, yes billion, in a decade. You would have deduct the penalty payments from your employees' paychecks.

Massachusetts uses a similar program now and the state discovered there are people who are more willing to pay the fine than to be forced to purchase insurance they do not want.

Those of us who sell insurance and tell our potential customers that we will never try to sell them something they neither need nor want will find this impossible to swallow. Those of us who are business owners definitely do not want to become collectors of fines for the feds. No matter how you dice it, this is not what most of us signed on to. If you're bothered by this, for any reason, make your opinion known. In the mean time, attorneys general in the states are filing suit. Health insurance is one thing; forcing people to engage in purchasing products against their will is something else. Today the issue is insurance. What will tomorrow bring?

Patricia Woods

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How The Healthcare Bill Will Affect Small Businesses

Debate about the new Health Care Bill once dominated the airwaves and Internet. However, discussion has gone dormant. Better known as "Obamacare," the legislation has been tweaked since its passage.

Those changes had no impact on most cost increases. So, a question remains unanswered. How much is the Health Care Bill really going to cost you? Small business owners face a variety of mandates.

Employers will be required to report the value of an employee's medical insurance on his or her 2011 W-2 forms. The U.S. Internal Service delayed this edict. It's letting employers decide whether to comply this year.

If not for Congressional action, small businesses would have mandated to file Form 1099s.

People remaining uninsured after 2013 could face penalties. This mandate remains law, despite numerous states' constitutional challenges. With that said, the IRS has yet to figure who'd owe the penalties.

Businesses with more than 50 or more full-time equivalent employees, which have no health plan, face an excise tax beginning in 2014. In theory, companies with part-time employees could be required to provide coverage.

High-income earners could face a nearly 4 percent Medicare surtax on passive income, starting in 2013. They are married couples, filing jointly, earning $250,000 or individuals earning $200,000.

Unearned income like interest, royalties, dividends (or K-1 income from an S-Corporation), capital gains, annuities and rental income is subject to the tax. IRS rules exclude business income.

No change is on the horizon, before these requirements are enacted. If changes are made, they'd be the U.S. Supreme Court's responsibility. With that said, more guidance from the IRS is needed.

Former Office of Management and Budget official James Capretta, now a Heritage Foundation fellow, claims the 10-year cost of "Obamacare" could meet or exceed $2.5 trillion, according to Investors.com.

Investors.com also reports subsidies to individuals and businesses would soar. For instance, subsidies for a family of four earning $60,000, covered by an employer's health plan, would fall by $4,500 in 2016.

That's as opposed to a family buying insurance from a government exchange. Mandating people purchase health insurance would increase premiums by 10 percent or more.

Rising health care costs have already affected businesses, according to finance.yahoo.com. It noted that the Wall Street Journal reported Caterpillar will take $100 million hit in the first year.

Medical device Medtronic warned new taxes could translate into significant layoffs. Verizon announced it would likely cut benefits in response to higher costs.

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