The Chambers of Magnolia Legislative Alliance, a combined effort of the Magnolia Area Chamber of Commerce and the Magnolia Parkway Chamber of Commerce, held a luncheon Sept. 20, where members learned about Obamacare’s effects on small businesses.
Speaking to the group were Kelly Shea, a human resources and employee relations specialist and Gina Clark, a Magnolia certified public accountant.
Members were shocked by some of the things they heard.
Many of the regulations apply to businesses with more than 50 employees, such as the $2,000 penalty for not offering insurance to employees, which Shea said could have some consequences.
‘This will keep a lot of people from going over 50 employees,” she said.
What Shea said she is most concerned with are smaller insurance companies being bought up by the big conglomerates, which has happened before.
“We used to have a lot of smaller companies that would go in and underbid the bigger companies, but their premiums collected were not enough to offset their costs,” Shea said. “So when the bigger companies bought them out, they had all this bad business, so they had to raise everyones premiums by 20 or so percent.”
She is afraid the new exchanges will cause the same scenario, thereby pricing small businesses out of the market.
“If you are with an A-rated company now, I would advise you to stay with it until we see how this plays out,” she said. “There’s going to be a lot of fighting and a lot of court cases as more of this rolls out.”
Another item rolling out is companies with more than 250 employees have to show how much they paid in health care benefits for each employee on their W-2 form. Shea said that is a sign of a future tax on benefits.
“It’s not taxed yet, but it’s coming,” she said.
Clark said the tax implications are huge with the new law.
She said medical costs must now exceed 10 percent of your gross income before someone can deduct them for tax purposes. Previously that rate was 7.5 percent.
"If you are a majority owner of several companies, they will add them all together to come up with your employee count,” Clark said, adding that if that total reaches 51, the combined companies are subject to the $2,000 fine or to carry insurance coverage. They are required to cover at least 60 percent of the cost of health care for the employee.
“If the employees share of the cost (for individual coverage, not including dependants) exceeds 9.5 percent of household income, the employer is required to pay up to 9.5 percent of household income if that amount is more than 60 percent of health care costs,” Shea added.
Clark said that can open up huge disclosure and privacy issues as well.
“You will have to disclose that you have a spouse and what your household income is to your employer now,” she said. “You never have had to disclose that type of information before.”
Both Shea and Clark agreed that this aspect of the law could have huge ramifications, causing married people to be at a disadvantage when competing with single people for jobs.
Clark also told the group that there will be a new surtax added to the Medicare tax of 0.9 percent for anyone making $250,000 or more in combined household income, as well as a new 3.6 percent surtax on investment income. This investment income tax could effect many retirees living off of investments, including those in the middle class.
Shea said that she had a feeling that Obamacare will not be repealed next year, even if Mitt Romney becomes President, because to avoid a filibuster in the U.S. Senate would require 60 Republicans to be elected, or to find enough Democrats to support a full repeal.
“The way things are going, I don’t think that will happen, at least not in the senate,” she said.