The Clock is Ticking on 2019: Congress Must Fix the “HIT” to Lower Health Coverage Costs for Small Businesses

By at 14 December, 2019, 10:45 am

Fixing the HIT Tax would boost the confidence and competitiveness of America’s small businesses going into 2020


For Immediate Release

Washington, D.C. – There are a few short days left on the legislative calendar before Congress breaks for the holidays and the remainder of 2019. Congressional leaders are working throughout the weekend to cement priorities, and one critical issue that must be addressed is helping America’s small businesses with high health coverage costs. Congress has a bipartisan opportunity to do so by repealing or fixing the health insurance tax (HIT), which directly targets the health plans of the self-employed and small businesses. According to Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan, the cost of health coverage continues to be a major pain point for small businesses. High costs are a drag on growth, prevent many small businesses from providing coverage, and are a barrier to people starting businesses because they do not want to risk losing coverage when they go out on their own.

On the latest Forbes Books Radio/SBE Council podcast, Karen reviews the holiday shopping season thus far, and what Congress needs to do to help small business before the end of the year – passing USMCA and repealing the HIT tax. (Click on the image above to listen.)

“Small businesses are the dynamic engine that keeps driving this economy forward, but they need some help from Congress to maintain confidence and growth for 2020. Repealing the HIT, which has bipartisan support, would be a huge year-end gift that will positively impact small businesses into next year and beyond,” said Kerrigan.

The HIT, included in the Affordable Care Act (ACA), will add approximately $16 billion to the cost of coverage for individuals, small businesses and Medicare Advantage seniors if allowed to return in 2020 (there is currently a moratorium on the tax). This 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.

As noted, there is 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. Repealing this steep tax would provide relief and the needed certainty small businesses need to plan, operate and expand.

“The steep per-plan HIT fee will quickly add up for small businesses with multiple employees. Repealing this tax will help small businesses with many key challenges, such as providing them with extra resources to expand and invest, and increase wages for their employees. In this tight labor market, finding and retaining workers remains a big challenge. Being able to offer and maintain employee health coverage is essential to competing for workers,” said Kerrigan.

SBE Council is strongly advocating that a HIT tax fix, ideally repeal, be included in a year-end package. Given the massive bipartisan support for action, Kerrigan said there is no reason for not making HIT tax repeal a priority.

“The added cost of up to $500 per-employee for health insurance coverage is a huge burden for most small businesses. All members of Congress say they support their small business constituents, and this is an opportunity to do so. The HIT tax must be fixed. Inaction is not an option on this critical issue,” Kerrigan added.

Related Content:

Taxpayer Groups Join Small Business to Call for a Solution to the Insidious HIT Tax, Media Release, December 5, 2019.

FIX the HIT: Coalition Letter to Senate Majority Leader McConnell and House Minority Leader McCarthy, December 3.

Bipartisan Momentum is Building to Fix the HIT Tax, Small Business Insider blog post, March 2019.

Letter to President Trump: HIT Tax Action Needed Now to Sustain Small Business Optimism and Growth, November 2018.

Health Care Costs #1 Concern of Small Business Owners: HIT Tax Relief an At-Hand Solution, Small Business Insider blog post, November 2018.



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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