Starting this January 2014, there is a new tax on insurance companies that they are passing on to their customers. This tax is a doozy and it is only hitting small business and private insurance plans. That’s because there is an exemption for employer self-insurance plans. About 80% of plans with 500 or more worker and union plans are self-insured so they won’t pay the tax.
That means the brunt of the tax will be borne by the small business owner. The Congressional Budget Office reports that the tax will be passed through to consumers in the form of higher premiums. The Joint Tax Committee estimates that this tax will increase the insurance premiums by 2% to 2.5%.
Projected further, the National Federation of Independent Business calculates that the higher insurance costs will shrink hiring by 146,000 to 262,000 jobs over the next decade. Most of the cuts will be by small businesses.
What’s the solution? As costs go up, your income needs to go up. If you don’t have a business, start one. If you already have a business, look for ways to cut your costs and expand your business.
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