How will new health insurance tax affect small businesses' costs?

The Affordable Care Act was intended to help make health insurance more affordable for millions of people across the country including employees of small businesses. According to a report from the Washington Post, now many small business owners are very concerned that the law will actually lead to higher costs going forward which will impact the businesses, employees, and the economy as a whole.

Built into the framework of the ACA is a planned tax increase on health insurance companies to help finance the overhaul of the health care system. These additional taxes, while charged to the health insurance companies themselves, will most likely be passed on to small businesses that currently buy group coverage in the open market. Small businesses fear they will be hit hard by what some experts view as a disproportionate tax that will have little impact on large businesses that often self-insure their employee health care costs.

Additionally, part of the ACA requires that all companies with 50 or more employees working 30 or more hours per week to provide employees with health coverage or face sizable annual fines of $2,000 per uncovered worker.

Many small business owners are concerned about how they will be able to cover these costs. Many may choose to cut payroll, and the National Federation of Independent Business projects these efforts could cost the U.S. economy hundreds of thousands of jobs over the next few years.

Small business owners likely have to make a number of decisions related to how they will choose to extend coverage to their workers once the ACA goes into effect beginning at the start of next year.

Proponents of the measure say that while this may be more burdensome to small businesses and some people, adding coverage for some 27 million Americans who never had it before is simply too important, the report said.