You’ve been hearing about healthcare reform. A healthcare bill is finally here as I wrote a few days ago. (See What U.S. Small Businesses Need in Healthcare.)
But so many proposals have been floated, and so many talking heads on cable news shows have discussed various options, that things are confusing. You may be wondering exactly what is in the healthcare reform bill entered in Congress this past week.
Well, wonder no more. We’ve got a quick cheatsheet.
The 1,000-plus page plan proposed in the House provides:
- Employer Mandate: Requires employers to provide insurance or pay a penalty for not doing so. Businesses with more than $500,000 in revenues [payroll] would pay a penalty of 8% of payroll. There is a graduated penalty for firms falling between $250,000 to $500,000 [$400,000] in revenues [payroll] with business with less than $250,000 exempt from the mandate. (The graduated rates are 2% of payroll for employers with payrolls above $250,000 to $300,000; 4% for employers with payrolls above $300,000 to $350,000; and 6% for employers with payrolls above $350,000 to $400,000.)
- Individual Mandate: Individuals and the self-employed are required to buy health insurance or pay a financial penalty, which would be 2.5 percent of income.
- Higher Taxes: A surtax would be imposed on higher-income individuals – many of which are small business owners. Individuals earning $280,000 and couples earning $350,000 would get hit with a 1% tax; those making $500,000-$1,000,000 would be taxed 1.5%; and couples earning more than $1 million would pay a 5.4% tax. These tax rates would increase if certain targets are not met.
- Government Health Insurance: A government-run health care plan is established.
The above is from a statement by Karen Kerrigan, CEO of the Small Business and Entrepreneurship Council. She goes on to call the proposal currently in the House of Representatives “wholly unacceptable.” I don’t want to get into the advantages or disadvantages of the proposal — we could argue that all day long — heatedly, I am sure. I just wanted to give you a cheatsheet of the highlights of the healthcare plan as it currently stands, and as it relates specifically to small businesses.
EDITOR’S NOTE: The original source incorrectly stated “revenues” when it should have been “payroll” in two places. Also, it used a figure of $500,000 in one place, but I think it was meant to be $400,000, as that is what other sources refer to as the threshold level for the highest penalty. So I made the corrections above to indicate the correct information, so as not to mislead anyone. My corrections are in brackets after the crossed-out items.