Terry Corbell, The Biz Coach
By Terry Corbell
Business Consultant

How Healthcare Law Would Affect Small Business

 

Updated May 14, 2010

Some 350,000 small business advocates have joined the legal fight against the healthcare law. They are members of the National Federation of Independent Business. The so-called healthcare reform pushed by Congress and the Obama Administration has caused more angst for small businesspeople than any issue in recent memory. For fiercely independent entrepreneurs, there are questions of socialism and constitutionality. They see a further deterioration in the makeup of the United States.

They’re grateful to the 14 state attorneys general who are fighting the law’s constitutionality. Republicans are hoping for enough votes for their candidates in the November elections to mount a revocation drive when Congress reconvenes in 2011.

Meantime, if the law is allowed to stand, it’s important for small businesspeople to understand how they’re affected. For starters, make sure you convert from a sole proprietorship to a limited liability partnership or corporation.

There would be no limits on premium rate hikes before 2014.

If you have 50 more employees, the government would fine you if you don’t provide coverage to your workers. Employers with less than 50 workers are exempt.

However, personal coverage is mandatory.

There would be 19 new taxes.

Generally, indigent self-employed are likely to get Medicaid. You can’t be denied insurance if you have a pre-existing condition.

Starting with your federal tax filing for 2010, employers with 25 or fewer workers that pay half of the workers’ premiums would get a 35 percent write-off. If employers purchase health insurance through an exchange beginning in 2014, they’ll receive a 50 percent deduction for healthcare premiums on their tax returns.

To save money, companies with as many as 100 workers can join a pool – Small Business Health Options Programs (SHOP). It’s hoped that such SHOP exchanges will enable a lower of premiums.

Federal subsidies would be available to the self-employed for healthcare who earn up to 400 percent of the federal poverty level. Subsidies would be available to families of four earning as much as $88,200.

Dependent children – up to the age of 26 – would be covered on their parents’ policy.

Beginning in Sept. 2010, insurance coverage would include a lot more than basic catastrophic coverage. Preventative care must be included.

For individuals earning $200,000 and families making $250,000 beginning in 2013, the Medicare rates will increase from 1.45 percent to 2.35 percent. For businesspeople getting capital gains, dividends or interest income, there will be an extra 3.8 percent tax.

Lifetime maximum limits on insurance policies would be outlawed.

Finally, regarding the so-called “Cadillac” plans, companies that pay more than $10,200 for individuals or $27,500 for families would be required to pay another 40 percent in the form of a tax. Naturally, this would be a huge hit to many small businesses.

My sense is that the so-called healthcare reform is a denunciation of individual economic and political freedom. And I fervently believe there are grounds to over-rule the law on constitutional grounds.

From the Coach’s Corner, in conjunction with April being “National Financial Literacy Month,” the Small Business Administration is offering entrepreneurs free webinars on its Web site to learn fiscal fitness.

Seattle business consultant Terry Corbell provides high-performance management services and strategies.