Local small-business reaction to Sunday’s passage of health care reform ranged from outrage to uncertainty but also some expressions of support.
“I think health insurance is an individual issue and not a business issue,” said Kristie Lara, part-owner of Northwestern Railroad Construction in Frederick. “Businesses seem increasingly like an avenue of enforcement and tax collection for the government.”
Lara said her firm, which builds railroad tracks, offered health care coverage from 1999 to 2004, until double-digit premium increases each year made it too expensive.
Reforms that push businesses to provide health-insurance coverage without keeping overall costs in check are a formula for failure, she said.
“This bill will raise, not lower, insurance costs, and it will increase both taxes and the cost of doing business for the very people they said they wanted to help — small businesses,” said Tony Gagliardi, state director of the National Federation of Independent Business. “We couldn’t have been clearer how damaging this bill will be to Colorado’s small businesses and the economic recovery of this country.”
But not every small-business owner agrees with that view.
“It has become clear to me that the situation we are in right now is unworkable,” said Nora Hill, owner of Kilwin’s Chocolate-Ice Cream in Fort Collins. “I can barely insure myself.”
Kilwin said about three of her employees could use health-insurance coverage but that her business can’t afford it.
She is hopeful that competitive buying pools that start in 2014 will allow small businesses such as hers to obtain lower premiums.
The health care legislation treats businesses differently based on size, said Mark Luscombe, principal analyst at CCH, a tax-advisory firm.
Employers with fewer than 10 full-time employees earning an average annual wage of $20,000 or less will have the premiums they pay returned via a tax credit.
Firms with 10 to 25 full-time employees earning an average annual wage of $40,000 could get up to 35 percent of the premiums they pay credited back from 2011 to 2013. In 2014 and 2015, up to 50 percent of premiums will return in a credit if coverage is purchased through a state exchange.
Firms with 50 or more full-time employees will have to pay $2,000 per uninsured employee, with an exemption for the first 30 employees.
They will also likely face pressure from their workers, who will be penalized at 1 percent of income in 2014, 2 percent in 2015 and 2.5 percent in 2016 if they don’t obtain coverage.
The legislation will require businesses to file more reports with the IRS, including listing health-insurance premiums on W-2 forms, Luscombe said.
And business owners who make more than $200,000 individually or $250,000 per couple face higher Medicare taxes to pay for reforms.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
