The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act are still receiving high praises from President Obama – although as more business owners become aware of the laws’ provisions, public skepticism is on the rise. The laws’ related taxes, costs and regulations pose serious challenges to business owners in terms of staffing, growth and profitability.
Although the new laws were touted as being advantageous to small businesses, the benefits have yet to be seen. For these companies – with 50 or less employees – here are a few areas of concern:
•Making sure they are following the laws could result in extra costs. As it is, most small businesses are not staffed to ensure they’re compliant with the intricacies of the new policies and their financial and tax implications.
•There is no feasible financial assistance to encourage small businesses to offer health care. In fact, the increase in administrative costs and red tape may actually end up costing these companies more than aiding them, especially as premiums are likely to go up. The predictable result is a decline in small companies offering coverage at all.
•The two-year (starting in 2014) tax credits being offered in attempt to make the plan attractive is projected not to have much actual reach to the majority of small businesses. It’s estimated that just north of 10 percent of the companies with 25 or less low-income employees will even be affected, based on all the exclusions. This same population will earn a substantial break by going through yet-to-be-formed state exchanges, thereby making it almost silly for an employer of this makeup to take a financial hit to provide coverage.
•Many small-business owners will be adversely impacted by greater Medicare payroll and investment (non-payroll) taxes. It could land them in a higher tax group, as well as discouraging investment into their own businesses.
Small businesses are not the only ones to expect negative change thanks to nationally imposed health care reform. Companies ranging in size from 199 to 50 employees will also take a hit. New taxes will hit these business owners in 2014, in the event that they aren’t providing employees with health insurance options the government deems appropriate. This is to help "balance out" benefits workers will receive by going with the state exchanges for their coverage. No doubt there’s a risk that employers may feel the need to reduce their workforces and/or wages, let alone shifting to different means of getting things done (temps, part-timers, etc.).
It will be difficult to see exactly how salons are impacted – and react – until the policies are in full effect in 2014. However, suffice it to say that this health care mandate is just one more bump in the road to overcome for today’s salon professionals.
Related Article:
Examining the Health Care Bill’s Impact on Salon Owners
Source:
The Heritage Foundation: Obamacare: Impact on Businesses
