Small Business and Obamacare: The New Law's Rules Do Apply "To the Vast Majority of All Businesses"

By Lahm, Robert J., Jr. | Entrepreneurial Executive, Annual 2014 | Go to article overview

Small Business and Obamacare: The New Law's Rules Do Apply "To the Vast Majority of All Businesses"


Lahm, Robert J., Jr., Entrepreneurial Executive


INTRODUCTION

The idea behind the Affordable Care Act (ACA) also known as Obamacare or by its full name, The Patient Protection and Affordable Care Act (P.L. 111-148) ("Patient Protection and Affordable Care Act," 2010), was to provide health care coverage for all Americans, and to do so affordably. The Health Care And Education Reconciliation Act of 2010 (Public Law 111--152) ("Health Care And Education Reconciliation Act," 2010) added to the already lengthy and legislation. Infamously, Nancy Pelosi, Speaker of House, has been widely quoted after stating: "But we have to pass the bill so that you can find out, what is in it--away from the fog of the controversy" (Pelosi, 2010). However, notwithstanding the ACA's passage, it has remained embroiled in controversy ever since.

A major challenge began when the National Federation of Independent Businesses (NFIB), and twenty-six states, along with private individuals challenged the constitutionality of the law in an action against the U.S. Departments of Health and Human Services (HHS), Treasury, and Labor, and their respective Secretaries before the Supreme Court. The law was upheld, by a 5 to 4 vote, but only after the Court determined that the Individual Shared Responsibility Payment (which had been labeled in the original language of law as a "penalty") could effectively be considered a tax, further reasoning: "The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penalties for unlawful acts often are; and the payment is collected solely by the IRS through the normal means of taxation" ("National Federation of Independent Business v. Sebelius, Slip Opinion, No. 11-393," 2012, p. 4).

Surveys from reputable research organizations show that small businesses are reacting to the ACA by reducing hours and putting off hiring decisions. As well, large employers such as Home Depot and Trader Joe's are cutting health benefits for part-timers while others such as are IBM are removing retirees (Whelan, 2013) while United Parcel Service (UPS) announced that it was removing approximately 15,000 spouses employees' from its company health plan (Wieczner, 2013). "By denying coverage to spouses, employers not only save the annual premiums, but also the new fees that went into effect as part of the Affordable Care Act" (Ibid). Besides legal challenges, implementation of Obamacare has been accompanied by a government shutdown (Rinaldi, 2013), numerous other delays, exemptions (Pfeiffer, 2013), waivers (Radnofsky, Weaver, & Needleman, 2013), and millions of existing policy cancellation notices (Barrineau & Dastagir, 2013; Roy, 2013a).

Recently, due to problems with the HealthCare.gov website, it was announced that the Small Business Health Option Program (SHOP) marketplace exchanges on the HealthCare.gov site would be delayed for another year until November 2014 (Taulli, 2013), thereby exacerbating an environment of economic uncertainty (Banjo, 2013; Rogers, 2012; Straud, 2013). While these website problems were at first passed off as glitches, through a series of hearings, investigations, and media reports, it became obvious that a plethora of problems existed, including security vulnerabilities that put users' personal privacy at risk. Despite the fact that the website has not been fully functioning, and following a two month delay for repairs (the administration backpedaled to suggest that fully functioning meant that it would work for a majority of users), individuals are still threatened by IRS imposed penalties if they fail to sign-up. The law's complexity is such that consumers and small businesses will be subjected to a difficult, underestimated, and costly compliance burden (Lahm, 2013) as they struggle to navigate numerous difficult-to-interpret provisions (Amato & Schreiber, 2013; Coombs, 2013; Neiburger, 2011), requiring significant amounts of assistance from tax and accounting professionals (Amato & Schreiber, 2013). …

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