Just another unfair tax

In the next few months, thousands of small business will file their tax returns across Delaware. But this year, on top of the myriad complex tax liabilities and unequal deductions forced onto small business owners, they now face another unfair tax by the Internal Revenue Service (IRS): a penalty for offering health care support to their employees.

You may be a local baker who wants to offer financial help to cover the costs of doctor co-pays or deductibles for the part-time, seasonal college student who works in your bakery; or the consultant who wants to help cover the prescription costs of a retired, part-time secretary on a fixed budget. Unfortunately, Delaware small business owners trying to do right by their employees may instead end up owing thousands of dollars in taxes.

Here’s the rub. This IRS interpretation of the Affordable Care Act has dealt a devastating blow to the small business community by virtually eliminating the use of a traditionally used health care tool for millions of small business employees.

Health Reimbursement Arrangements have historically been a very powerful and effective tool for the small business community to do right by their employees by helping them pay for crucial health care needs. Under these programs, small employers who cannot afford to provide comprehensive health coverage have offered financial assistance to their employees to help defray the high cost of health insurance premiums and other out-of-pocket medical expenses.  Part-time and seasonal employees have often relied on HRAs for vital healthcare support. HRA’s are fair and impartial because you must offer the same amount to each employee who has an HRA account.