Bill Would Repeal Employer Mandate, Health Insurance Tax

Feb 13, 2013

The health care law continues to play into small business owners’ worries. The National Federation of Independent Business’ February Small Business Optimism Index rose slightly by 0.9 points but is “still one of the lowest readings in the survey’s 40 year history.” The analysis states [emphasis mine], “Owner pessimism is certainly not surprising in light of higher taxes, rising health insurance costs and increasing regulations. There was very little to be positive about. Small businesses certainly aren't pleased with higher health insurance premiums caused by the health care law.

Senator Rob Portman (R-OH) wants to make the health care law less burdensome on small businesses by introducing the “Small Business Health Relief Act of 2013.” In a letter to the Senator, U.S. Chamber Executive Vice President for Government Affairs Bruce Josten listed four reasons why the bill should become law:

First, S. 24 would repeal the employer mandate provision of the Patient Protection and Affordable Care Act (PPACA), which would protect existing jobs and spur the creation of new jobs by removing much of the uncertainty employers are experiencing. The employer mandate discourages businesses from hiring additional employees because businesses with 50 or more full-time equivalent employees (FTEs) are required to offer coverage. Additionally, the employer mandate dissuades businesses from hiring full-time employees because the penalty, once triggered, is calculated based on the number of full-time employees.

Second, this legislation would overturn the “grandfather regulations” of the PPACA, which restrict the ability of employers to modify health plans in existence before the health care reform law. By voiding the grandfather regulations, the bill would preserve the original intent of the law by allowing people to keep the coverage they have.

In addition, the bill would repeal limitations that the health reform law placed on various health savings arrangements, such as flexible spending accounts, health savings accounts, and health reimbursement arrangements. Specifically, it would repeal the restriction placed on over-the-counter medicines, as well as the annual cap placed on such accounts.

Lastly, S. 24 would help make insurance more affordable by repealing the health insurance tax, which is estimated to increase premiums by as much as 3%, or nearly $5,000 per family, over a decade. Repealing this provision alone could lower the cost of the average annual family health insurance premium in 2016 by $350 to $400, according to the non-partisan Joint Committee on Taxation.

Repealing the employer mandate and the health insurance tax are big components here, but everything in this bill would help small businesses continue to offer affordable health coverage to their employees.

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