Taxpayer Groups Join Small Business to Call for a Solution to the ‘Insidious’ HIT Tax

By at 3 December, 2019, 1:08 pm


For Immediate Release

Washington, D.C. –  There’s a big “to do” list for Congress to complete before the end of the year, and one priority must focus on helping small businesses and all Americans with high health coverage costs. The issue remains a top “pain point” for small businesses and the self-employed.  That is why the Small Business & Entrepreneurship Council (SBE Council) has galvanized allies in support of fixing the insidious health insurance tax (HIT), one of the more painful taxes in the Affordable Care Act (ACA). In a letter sent to Senate Majority Leader Mitch McConnell and House Minority Leader Kevin McCarthy today, the groups urge immediate action to provide relief from the “HIT,” which comes back to life in 2020 without a fix to repeal the tax, or extend the current moratorium for an additional two years. Both of these legislative options have significant bipartisan support in Congress.

“Small businesses, families and all Americans want Congress to address issues that impact their daily lives, and the high cost of health care is a big one. Thankfully, there is bipartisan support and momentum to address the HIT, but leadership is needed on both sides of the political aisle to push through a bipartisan solution,” said SBE Council president & CEO Karen Kerrigan.

The letter, signed by some of the nation’s leading taxpayer organizations and health experts, urges a renewed focus on reforming the ACA and it burdensome taxes, including an immediate fix to the HIT:

“We write today to remind you of the burdens of the health insurance tax (HIT), its disproportionate impact on small businesses, the self-employed and seniors, and the need to take immediate action to relieve families and small businesses from this tax.

If allowed to return in 2020, the HIT will add approximately $16 billion to the cost of coverage for individuals, small businesses and Medicare Advantage seniors, which amounts to an increase of between $400 to $500 on health insurance premiums. Half of this insidious tax is paid by individuals and families with incomes between $10,000 and $50,000.  Small businesses are targeted by this tax, as the HIT is levied on the fully-insured market, where 87% of small businesses purchase their health insurance.”

The letter notes the bipartisan support for repealing the HIT (S.80/H.R. 2447) and for extending the current moratorium for two years (S.172/H.R. 1398). In early November, over half of the U.S. House freshman class sent a bipartisan letter to Speaker Nancy Pelosi and Minority Leader McCarthy to urge action on H.R. 1398.

Kerrigan said that providing certainty and relief from this steep tax, which quickly adds up for small businesses with multiple employees, will help to keep entrepreneurs confident and their businesses competitive into 2020. With a tight labor market and access to workers still a big challenge for small businesses, being able to offer and maintain employee health coverage is essential to attracting and retaining workers.

“The added cost of $500 per employee for health insurance coverage is a huge burden for most small businesses. There are other costs and needed investments that are putting pressure on entrepreneurs as well, including well-deserved pay increases and bonuses for the workers that help small businesses operate and compete in a challenging economic environment. Congress must fix the HIT. Inaction is not an option on this critical issue,” Kerrigan added.


Karen Kerrigan, SBE Council president & CEO


SBE Council is nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For 25 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth. Visit for additional information. Twitter: @SBECouncil





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