Area small businesses split on health care reform ruling
RICHMOND, Va. (WTVR) – As the smoke clears following the Supreme Court’s historic decision to uphold President Obama’s health care reform law, business owners are now weighing their options when it comes to providing health insurance or opting to pay a penalty.
For months, proprietors like David Napier, the founder of White House Catering and the Old City Bar Chophouse in downtown Richmond, have cited “uncertainty” over taxes and regulations as a roadblock to hiring.
With the Supreme Court decision rendered, and the Affordable Care Act set to take full effect in 2014, have the perspectives of many business owners changed?
“I’m actually being encouraged to shrink my business, not grow my business under this law,” said Napier, who told CBS 6 he’ll have to do some hefty reading to get up-to-speed on the law’s requirements and penalties.
Napier is referring to the fact that with more than 25 full-time employees on his staff, he’s not eligible for a small business tax credit.
The River City caterer would find himself facing penalties, however, if he chooses to expand his business to 50 or more employees — the point at which the federal government starts levying taxes on businesses that do not offer employees health insurance.
“I want insurance for all my employees, and I think everybody wants to have insurance,” said Napier, who recently explored coverage options on the marketplace.
But if providing health insurance proves too cost-prohibitive, Napier said he’d probably ditch plans to open a new restaurant and expand his business, because of penalties looming in 2014.
“I think a lot of businesses are in the position I’m in,” continued Napier. “They’re afraid to grow because it might be worse off than staying small.”
On the other end of the spectrum, Bob Broomfield, owner of the entertainment and video game shop ‘Play N Trade’ in Carytown, hailed the ruling as a boon to most businesses.
With only six people on his payroll, Broomfield said he’ll utilize tax credits to offer health insurance to his employees and attract new talent to the store.
“I think the appeal of having a job any place, even on a part-time basis, is to have access to good health care,” said Broomfield, “and that benefits the business as well as the employees, who will be there [and healthy].”
Information provided by the National Federation of Independent Business Friday indicated that of the 350,000 members nationwide, about 88 percent have fewer than 20 employees and the average member has fewer than 10 workers.
That’s relevant because the eligibility requirements for receiving a small business tax credit for insurance are:
- businesses with fewer than 25 full-time employees (an average of 30 hours a week or more)
- an average salary of less than $50,000 per full-time employee.
For those businesses that opt not to provide health insurance to workers, the penalty will be $2,000 for every full-time employee above a threshold of 30 full-time employees, starting January 1, 2014.