Congressman Chris Collins Chairs Committee Hearing on ObamaCare’s Small Biz Impact

WASHINGTON, DC – Congressman Chris Collins (NY-27) wants the Obama Administration to clarify how it is counting and classifying small business employees as the new health care law mandates take effect.  Collins chaired a full House Small Business Committee hearing today examining the health care law’s application of the business aggregation rule and the serious accounting concerns it raises for small businesses.

The health care law requires businesses that employ 50 or more full-time or full-time equivalent employees to offer health insurance to their full-time employees. But the heath care law’s definition of ‘employee’ is unclear depending on how the ownership of the business is structured.  While the answer is simple and straightforward for one business with a single owner, the answer is far murkier when a business has multiple owners, especially when the owners are family members. 

Under the presiding chairmanship of Rep. Collins, Chairman of the Subcommittee on Health and Technology, the Small Business Committee heard the testimony of concerned small business owners, examined the administration’s process of determining whether businesses are considered single or multiple entities under the health care law, and heard suggestions on what changes to the rules could be considered to reduce confusion.

“Small businesses need to know exactly what they have to do to comply with the health care law, and what it is going to cost,” said Chairman Collins. “Even at this late date, too many small businesses still do not have those facts. In particular, the business aggregation rule causes uncertainty among small businesses. The rules can be complicated and confusing, and small businesses need better answers and they need them quickly.”

Materials from the hearing are available on the Committee’s website HERE.

Notable Quotes:

Deborah Walker, CPA, National Director, Compensation and Benefits, Cherry Bekaert, LLP, Tysons Corner, VA, said, “…[T]he mechanical tests used for qualified plan discrimination testing are overly complex and understood for only a limited number of tax professionals. A small business would not be able to apply those rules without professional help and many of the advisers to small business would not be familiar with the rules.”

Ellis Winstanley, Chief Executive Officer, Tradelogic Corporation, Austin, TX, testifying on behalf of the National Restaurant Association, said, “The impact of the aggregation rules, and hence our status as an applicable large employer, will have an impact on each of our businesses. Simply, the cost of doing business for each will increase, yet they must be able to stand on their own. Labor costs are typically one-third of a restaurant’s expenses. Operators only have a finite dollar amount to spend on labor costs given thin margins, including employee benefits such as health insurance coverage, and must manage these costs closely to remain viable.”

Donna Baker, CPA, Donna Baker & Associates, Adrian, MI, said, “These rules could cause employers to delay growth, manipulate ownership percentages or limit employees to less than 30 hours, discourage small businesses from investing in other businesses, and require health insurance coverage in industries where this is not the norm which will affect a business’s ability to compete.”