How Will Small Business Owners Deal With the Mandatory Health Insurance Law?

Don’t want to provide health insurance, easy solution, pay a fine.  This problem is becoming more and more evident as the law becomes closer to passing legislation.  Congress is trying to pass laws, which will help bring health insurance to the 46 million that are uninsured.

Two options for owners.  The House of Representatives wrote a part of this law that would fine small business owners up to 8% of their annual payroll if they choose not to offer any healthcare coverage.  There are some loopholes in their proposition.  Some owners are able to qualify for tax credits while smaller firms may not be penalized at all.  The Senate however wanted to add a section saying that companies of twenty-five employees or less would be spared from paying any penalties.  For the small businesses with more than twenty-five employees, the Senate would want the business owners to pay from $375-750 per worker a year if they refused supplying health care. 

How will small business survive?  The House wants businesses whose payroll exceeds $250,000 to offer coverage or face a penalty.  Its proposal would have the fine amount be on a scale based off the company’s payroll expenses. 

How does this effect the self-employed?  The Senates version requires all self-employed people to purchase health insurance or face a $750 penalty annually.  This requirement will force health insurance companies to accept your policy, not being able to reject you for pre-existing medical conditions or past claims.  The House version says that owners must purchase health insurance or pay a fine of 2.5% of the difference between their adjusted gross income and the tax filing threshold. 

Any long term concerns?  A recent study found that just 38% of small businesses could actually afford health care plans at all, which is 30 points lower than a similar study completed in 1995.  With the recent health care reform just proposed in Congress; if passed, could save billions of dollars for small business owners as well as same over 100,000 jobs that would have to be lost due to healthcare cost.  Will the law pass forcing small business owners to provide health care?  Will the new health care reform pass and help save mom and pop shops?  Only way to find out is to stay tuned…