BACKGROUND: The House Democratic leadership has unveiled their final health care reform legislation, with a vote expected before Veterans' Day - and possibly as early as this weekend. Unfortunately, the "Affordable Health Care for America Act" (H.R. 3962) contains numerous onerous provisions that will only drive up the costs for small businesses and penalize employers, rather than addressing health care costs in a meaningful way.
Some major areas of concern in H.R. 3962 for small businesses:
Employer Mandate: Employers will be required to offer health care to full and part-time employees. All employers with a payroll of $500,000 or more will pay a payroll tax of up to 8 percent if they do not provide "qualified" health insurance to their employees.
"Pay-or-Play": Employers who do offer benefits may still be subject to penalties if they do not offer "qualified" individual and family coverage, meet premium contribution requirements of at least 72.5% for individuals and 65% for family plans, and offer a "qualified" plan as defined by a government-appointed board. If an employee declines coverage from their employer and instead obtain coverage through the exchange, the employer will be subject to a payroll tax penalty of up to 8 percent. An employer who offers coverage other than the "qualified" plan can be assessed a penalty of $100 per employee per day, up to $500,000.
Surtax on Small Businesses: The bill contains a surtax on individuals with incomes of $500,000 single/$1 million joint - which will also impact the 75 percent of small businesses who are structured as pass-through entities and pay their business taxes at the individual level.
1099 Reporting Requirements: H.R. 3962 includes increased corporate reporting requirements that will mandate that companies issue a Form 1099 to all corporations from whom they purchase goods or services, once a $600 per year per vendor threshold has been reached.
TAKE ACTION: Visit www.BuildtheVote.org to quickly send an email message to your Representative asking him/her to vote NO on H.R. 3962. You can also call your legislators through the Capitol Switchboard at 202-224-3121.
