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Small businesses report premiums rising, are unaware of stiff IRS fine

By JACK WEATHERLY 

Sixty-three percent of small-business owners reported higher health insurance premiums between July 2014 and July 2015, according to a National Federation of Independent Business survey.

Also, 16 percent of the businesses surveyed are offering – and 20 percent are considering offering — a benefit for workers that they don’t realize is outlawed by the Internal Revenue Service’s interpretation of the Affordable Care Act.

“The Affordable Care Act may be providing some relief to certain Americans but small-business owners are largely not among them,” NFIB Research Director Holly Wade said in a news release.

Thirty-six percent of the surveyed businesses, which have between 2 and 200 workers, reported a health premium increase of more than 10 percent, Wade said in an interview.

For the previous 12-month period, a similar percentage of employers reported increases.  Eight percent of owners in the most recent period reported a decrease in premiums while 27 percent said their rates remained the same.

In a related matter, the study found that 16 percent of surveyed businesses with fewer than 50 workers currently reimburse employees for the cost of insurance or medical visits.  That’s troublesome, said Wade, because this year the IRS determined that reimbursing workers isn’t in compliance with the ACA.  Employers who violate the rule could face fines of up to $100 per day per employee, which potentially amounts to $36,500 per year.  Even more worrisome, said Wade, is that another 20 percent of owners are actively considering a reimbursement benefit for their employees.

“More than a third of small-business owners are in violation of the rule or may be in violation soon,” said Wade.  “That signals a big education gap in the employer community and it’s a very serious threat to small businesses.”

Of about 2,800 Mississippi members of the NFIB, most have fewer than 50 employees, state director Ron Aldridge said in an August interview.

About one in seven reimburse their employees for medical expenses, he said.

The Internal Revenue Service has interpreted that as a de facto group policy that is in violation of the Affordable Care Act.

One of the selling points of the Affordable Care Act of 2010 was that small employers would not have to provide coverage.

But the IRS imposed the $100 a day excise tax that went into effect July 1.

The Mississippi Insurance Department said in August that “the rule punishes small businesses for providing the only health insurance support many can afford – a contribution to help employees pay premiums for their individual or family policies or to help finance direct payments for medical services.”

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