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Health Care Taxes a Plenty

Impact on Small Biz

Minnesota’s Citizens Council on Health Care has published a paper by Twila Brase and Linda Gorman on the impact on small business of the current reform proposals, including these:

New Taxes – New taxes and assessments are imposed on business for failure to provide coverage, employee use of tax credits, waiting periods for insurance eligibility, funding for state health insurance exchanges, high-income individuals.

Play or Pay – The House bill penalizes businesses that do not provide health benefits with taxes at 2 – 8% of payroll. These rates are not indexed for inflation.

Limits Business Expansion – The House bill’s tax on high-income individuals is expected to act as a direct tax on business expansion since many small business owners finance expansion using income reported on their individual tax returns. The tax includes a 5.4% increase in capital gains tax. In addition, high-income earners will pay the planned increase in the payroll tax at a higher rate: 3.4%.

Definitions Matter – The definition of ‘large employer’ and ‘small employer’ are important. They determine which taxes, penalties, and requirements apply.

Waiting Period Prohibited – The Senate Bill limits waiting periods for employee coverage to 90 days and fines employers who have 1-2 month waiting periods.

Reporting Requirements – Both bills require government reporting of company and employee health insurance status, including details specific to each employee.

HSAs and Whistleblowers – The Senate bill threatens health savings accounts. The House bill provides whistleblower protections to employees.

SOURCE:

Citizens Council on Health Care

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December 11, 2009 - Posted by | Federal Government, healthcare | , ,

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