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The U.S. House Small Business Subcommittee on Economic Growth, Tax and Capital Access held a hearing, appropriately titled, “Lip Service but Little Else: Failure of the Small Business Health Insurance Tax Credit, to discuss the failures of the tax credit that Obamacare offered to small businesses.
Chairman Tim Heulskamp remarked that “the credit scheme is so cumbersome and poorly designed that it is largely ineffective.”
Testimony included remarks from persons representing the U.S. Chamber of Commerce, the National Federation of Independent Business (NFIB), and the U.S. Women’s Chamber of Commerce.
Harold Jackson, Executive Chairman of Buffalo Supply, Inc., a small business in Colorado with 20 employees who provided “a concrete real life example as to the shortfalls of this premium tax credit which is unfortunately illusive to most small businesses.”
Holly Wade, Director of Research and Policy Analysis, on behalf of NFIB, testified that “the tax credit was largely ineffective on both fronts as its design is exceedingly restrictive, complicated, and only offers limited and temporary relief to a larger small business cost problem.”
Michael Ricco, Quality Manager for AEEC, on behalf of the U.S. Women’s Chamber of Commerce, attested that “it is the small businesses in middle – particularly those between 50-100 employees – that could benefit the most from this health care tax credit.”
Four main points were central to the testimonies the subcommittee heard. The first was that the eligibility requirements were not effective enough to impact all small businesses. Second, the complicated language deterred most small businesses from even determining if they were eligible for the credit. Third, the tax credit is temporary, and can only be claimed for two years, providing little relief for small business owners. The fourth concern was that, as of July 1, 2014, the tax credit is only available to small business owners through the Small Business Health Options Program (SHOP ) marketplaces, limiting the options for employers.
This subcommittee hearing only offers some insight into the future negative impact of Obamacare on small businesses, and is very telling. It is indicative that there is a major problem to be addressed, as Wade ended her testimony that the health insurance tax credit was a poor tool for cost effectiveness and that “more importantly, health insurance costs continue to increase, and small business owners continue to struggle with their ability to afford offering the benefit.”
You can find the more information on this hearing at http://smallbusiness.house.gov/calendar/eventsingle.aspx?EventID=398925.
