NH small business leaders discuss costly outcome of looming federal Health Insurance Tax

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Local business owners discuss impact of the federal health insurance tax during a round-table discussion Dec. 5 at the NH Institute of Politics. Courtesy Photo

MANCHESTER, NH – New Hampshire small business leaders convened at the NH Institute of Politics on the campus of Saint Anselm College Dec. 5 to discuss the reality of the federal health insurance tax (HIT) and its effect on small businesses, if reinstated in 2020.

While there is currently a federal moratorium on the tax, it is expected to expire in 2019.  If reinstated, it’s anticipated that both public and private insurance markets will bear the weight of it

The HIT is a federal sales tax on health insurance plans purchased by small business owners and workers who receive their health benefits through an employer. It is projected to levy $16 billion in fees for health insurers by 2020, forcing payers to increase premiums by an estimated 2.2 percent, according to a 2018  report commissioned by UnitedHealth Group.

While there is currently a federal moratorium on the tax, it is expected to expire in 2019.  If reinstated, it’s anticipated that both public and private insurance markets will bear the weight of it

The UnitedHealth Group report indicates premiums would increase by $196 per person annually in the individual market, $154 in the small group market, and $158 in the large group employer market. Family health plan premiums would increase by $479 in the small group market and $458 in the large group market.

Several business owners gathered Wednesday with representatives of New Hampshire lawmakers to send an urgent message to  representatives in Congress:  Help lower health insurance premiums by ensuring that the HIT does not go into effect in 2020.

Their concern is that if Congress does not suspend the tax in 2020, New Hampshire small business owners and seniors on Medicare will be hit with higher health insurance premiums as they renew their coverage next year.

Tom Boucher, CEO and owner of Great New Hampshire Restaurants, said that HIT would adversely effect the growth of New Hampshire’s small businesses, including his own. Boucher employs 650 people at his restaurants, which include T-BONES, CJ’s Great West Grill and Copper Door.

“First, I would like to thank Senator Shaheen for standing up and trying to protect New Hampshire Businesses from this health insurance tax.  As the owner of nine restaurants employing people all around our state I am able to witness first-hand the devastating effect this tax has on the growth of small businesses and our ability to provide quality health insurance to our employees,” Boucher said.  “I hope Congress can act before the end of this year and suspend this health insurance tax before it’s too late.”
Also in attendance was Al Letizio Jr., President of AJ Letizio Marketing in Windham, whose family-owned marketing agency has been serving the food and non-foods/disposable products industry for more than a century. Letizio said HIT will limit his ability to provide benefits for his employees.
“My sales and marketing firm has always provided full health insurance coverage for all employees and I’ve never asked [employees] to contribute a cent. However, because of the HIT tax, I won’t be able to do this for much longer,” Letizio said.
“With thousands of New Hampshire small businesses facing similar choices, the HIT tax does real economic damage to small business owners, their employees and families. It limits the ability of small business owners like myself to hire more employees, and it undermines our efforts to take good care of our employees by increasing their salaries and benefits. For my small business, the HIT tax directly takes hundreds – if not thousands – of dollars out of my company’s budget that would otherwise be allocated to wage increases for my employees. Instead, that hard-earned money will be sent to Washington, D.C. Congress must find a way to come together in a bi-partisan way to suspend this tax for 2020,” Letizio said.
Longtime Nashua business owner Sy Mahfuz, whose family-owned Persian Rug Gallery has been operating for 65 years, said the tax creates a burden for small business owners.
“Taxing health insurance is only making life harder for small business owners across the state.  With premiums constantly going up, it’s difficult to afford a quality health plan with coverage that protects employees from high out-of-pocket costs,” Mahfuz said.

New Hampshire is home to more than 130,930 small businesses, which employ more than 286,700 New Hampshire workers. The UnitedHealth Group report indicates that New Hampshire families in the small employer market could be faced with $448 on average in higher premiums in 2020 as a result of the HIT. The tax is estimated to impact 156 million Americans, with 50 percent of those paying the HIT earning an income between $10,000 and $50,000.