With all the unclear wording in the ACA, there are constantly new setbacks for small businesses that were supposed to have a better time of getting their employees health insurance. This one might be the biggest.
The IRS is, in an unprecedented ruling, trying to put a stop to HRAs and hence private contributions by employers for employee health insurance. Basically, any employer giving additional money with every paycheck to help an employee fund their own health insurance policy can be fined $100 per day per employee. That totals to $36,500 per employee!
Defined contribution saves many small business employers a lot of money, and it’s our main prerogative here at Navinsure. Group plans are no good for a small business, and individual employees have different needs. They deserve to choose a plan that fits, and we can help with every step of this process.
14% of small businesses that do not offer group plans insure through these means.
So what’s the IRS’s problem?
National Federation of Independent Business policy director Kevin Kuhlman identifies that it’s a baffling decision. “It’s hard to believe Congress or the President intended to punish employers much more severely for actually helping their workers. Nevertheless, that’s the consequence and most small businesses don’t know it.”
Members of Congress are asking for a delay of this effective date until the end of the year, though it hasn’t happened yet. The bipartisan Small Business Healthcare Relief Act, which would repeal effects of this ruling, has yet to be passed through Congress but could in coming months.
The legislative process needs to remedy this unfortunate situation. Small businesses are the fabric of the US economy, and will be forced out of business as an unintended result of how the ACA was formed. We need to see our government actually help our small businesses rather than how they’ve continued to hinder them.