The Affordable Care Act’s employer mandate is crushing small business at tax time.
Somehow the federal government found a way to make filing taxes even more painful. And it’s called Obamacare.
This is the second year that taxpayers will be slammed with penalties for being uninsured because of two controversial provisions in the Affordable Care Act: the individual and employer mandates.
There’s no doubt the individual mandate is debilitating for average Americans, but it’s the employer mandate that is harming small business and killing jobs. In 2015, the law forced businesses with 100 or more employees to provide health insurance for its employees or pay the penalty. This year, it has expanded the mandate to include companies with 50 or more employees. And the penalties for not complying are steep.
The average healthcare cost for employers per employee last year was $12,590, according to the Kaiser Family Foundation’s 2015 Employer Health Benefits Survey. Businesses that can’t absorb that cost are hit with either a $2,000 or $3,000 fine per employee after their first 30 full-time workers.
The law’s loose definition of a full-time employee doesn’t help, either. Obamacare defines “full time” as someone who works 30 hours a week, instead of the typical 40.
To compensate for this harmful provision, employers have been giving employees fewer hours and laying off workers, according to Time.
The Obama administration has attempted to encourage small business owners to purchase group health insurance plans, but it has been unsuccessful. The small business health insurance tax credit—which ACA advocates touted as a way to reduce healthcare costs for businesses—targets such a small group of businesses that it’s not worth going through a complicated process to apply for it, opponents say. A paltry 181,000 small businesses out of as many as 4 million received this credit in 2014, according to the Government Accountability Office.
“The small business tax credit is a much better talking point than it is a financial incentive for small business,” said NFIB Research Director Holly Wade in an Oregon Business Report article.
The same could be said of the Affordable Care Act as a whole.