A movement is afoot in West Virginia to muster support on Capitol Hill to erase a tax contained with the new federal health care act that threatens small businesses with at least 50 workers on the payroll.
So alarmed over the Health Insurance Tax (HIT) that a Charleston consulting firm is orchestrating a drive to put Democrats in West Virginia’s delegation in Congress to support legislation in limbo in both houses to overcome it.
While many questions linger over the Affordable Health Care Act, Chris Hall, an employee of TSG Consulting, told a luncheon discussion Wednesday that HIT is definitely coming online Jan. 1.
What that shakes out to is a $500 increase per family or individual premiums imposed on small businesses, who can least afford it, Hall said.
“That’s a concern because small business is the economy, not just across the country, but particularly here in West Virginia, where you see about 70 percent of our economy is small business,” Hall told local business executives.
“What’s really unfair about this is that the large corporations, the unions, are exempt from paying this tax, which means that it’s going to trickle down to small business owners, the small business worker, and result in higher premiums and those who can least afford to pay it.”
Over the first decade, the tax is expected to generate some $100 billion.
“Look at how it impacts businesses,” Hall said.
“A lot of small businesses are already trying to provide health insurance, trying to do the right thing for employees, and struggling to do so. It’s reached the point, in our business, where health insurance premiums are the second largest cost of doing business, beyond payroll.”
Tom Susman, owner of TSG, pointed out there are some 124,000 small businesses in West Virginia that could be impacted, representing 592,000 workers.
In his own business, Susman said health insurance costs rose 10 percent last year and 19 percent the preceding year.
“And with that $500 plus coming down the road, it becomes a cumulative effect,” he said.
Susman said this added cost of doing business could be a factor in discouraging the hiring of more workers.
Mick Bates, owner of Bodyworks in Beckley, emphasized the higher insurance costs simply cannot be passed on to customers.
Bates is in the process of opening shop in a new location and said he wants to add more employees.
“I want to provide jobs and I want to provide jobs with benefits and insurance,” he told fellow business people.
“But I can’t afford to do it. So, I’m hiring part-time people, when I’d like them to be full-time, and that’s the reality. It’s (HIT) unsustainable. There has to be another way.”
Richard Jarrell, owner of Chick-fil-A in Beckley, said friends have been called by other restaurateurs, wanting to know if they could share employees so they would split their time so work hours would be fewer than 30, keeping them under the benefits threshold.
“A lot of people are trying to manipulate the system so they can stay under the full-time equivalent,” he said.