Health Costs #1 Concern of Small Business Owners: HIT Tax Relief an “At-Hand” Practical Solution

By SBE Council at 16 November, 2018, 1:17 pm

Small Business Insider

By Karen Kerrigan-

At a November 15 Small Business Roundtable (SBR) event on Capitol Hill, members of the coalition unveiled the results of a post-election survey, which found that health care ranks #1 when it comes the chief concerns of small business owners.

In a question posed by the SBR survey: “If you could have Congress and the Administration deal with just one issue next year, what would it be?”… small business owners overwhelmingly selected “health care.”

The reality is that Congress can do something this year by taking action on the health insurance tax (HIT Tax), which is a tax on insurance premiums imposed by the Affordable Care Act (ACA). This discriminatory tax hits the self-employed and small businesses.

Small Business Roundtable 2018 Post-Election Survey

As I noted in a recent media release on SBE Council’s agenda for the lame duck Congress, and prior to the release of the SBR survey: “The high cost of health coverage remains a pain point for small businesses and the self-employed. SBE Council supports extending the HIT tax moratorium through 2020, which would be welcome news for small businesses.”

A one-year moratorium on the HIT tax (for 2019) was approved by Congress, but the tax will return in 2020. That means higher premiums for small businesses, which will be announced in 2019.

A recent report by Oliver Wyman Actuarial Consulting found that 2020 premiums would likely increase by 2.2 percent due to the return of the HIT tax. The increase would remain for subsequent years.

For the self-employed and small businesses, that means increases ranging from $154 to $479 depending on the enrollee and product. Projected increases will amount to $196 per person in the individual market, and $154 per person and $479 per family increases in the small group market.

According to the report: “Over the next 10 years, this equates to premium increases ranging from $2,473 per person in the individual market to $5,824 per family in the small group market.”

(See a state-by-state and market by market breakdown of the Oliver Wyman report here.)

During the SBR event on Capitol Hill, I noted that it will take some time for measures such as Association Health Plans, improvements to health reimbursement accounts (HRAs), along with other reforms to take effect in the marketplace. Extending the moratorium through 2020 will provide a needed reprieve.  Ultimately, repealing the HIT tax is the ideal solution but this small-step – extending the moratorium through 2020 – will help many small businesses.

At the event, I also argued that an end-of-year “policy boost” that includes HIT tax relief will help to shore up small business confidence and their outlook on the economy. As revealed by the SBR survey, while 43 percent of small business owners feel “about the same” when it comes to the state of the economy, 40 percent are less optimistic. That should be a red flag for members of Congress and the Administration regarding a possible decline in the confidence of small business owners and their record optimism during the past year.

Small Business Roundtable 2018 Post-Election Survey

SBE Council is fiercely advocating on this important issue. As I spelled out in letters this week to President Trump, Vice President Pence and members of the House GOP leadership team:

“During the final days of the 115^th Congress, there is an opportunity to further fuel small business confidence and growth into 2019 and beyond. Several key policy reforms, if enacted, will provide small businesses and entrepreneurs with the certainty and relief they need, which in turn will help to sustain the strength of our growing economy.”

One of those reforms is HIT tax relief, and Congress must act now!

Read more about the HIT tax and SBE Council’s end-of-year agenda here: The Lame Duck Agenda: Unfinished Policy Business for Entrepreneurs and Small Business

Karen Kerrigan is president & CEO, Small Business & Entrepreneurship Council