How Obamacare’s ‘Aggregation Rule’ May Affect Small Business Owners

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  • Though there are many entrepreneurs and unemployed individuals singing praises of the Affordable Care Act and its ability to provide affordable health insurance to millions who would otherwise be priced out of health care options, there are several small business owners who deem certain rules and regulations surrounding the ACA to be detrimental to their business efforts. According to an aggregation rule within the U.S. Tax Code, if you are a small business owner and employ 50 or more people on a full-time basis, you may be required to provide health care for these employees even if the total number of employees is spread across numerous business efforts.

    For example, as reported in The Wall Street Journal, Donna Baker is an owner of an accounting firm, a payroll company and a retail store. She additionally is a minority stakeholder in her husband’s farming business. Though all of her business undertakings are separate entities, the fact that all four businesses currently (in aggregate) employ over 50 full-time employees, she may be subject to this aggregation rule and may be required to offer health-insurance benefits to her combined full – time staff.

    Why is this a big deal?

    Many small business owners have become paralyzed with financial fears that may come along with this new expense and have chosen to either

    1) curtail any expansion and hiring efforts to avoid having to pay this new expense and/or

    2) have let some employees go or have cut their hours so they will be deemed part – time employees.

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