When the Affordable Care Act was written, its authors assumed that Medicaid — the federal-state health care plan for the poor — would be expanded to low-income adults in every state.
But the U.S. Supreme Court's decision in July 2012 largely upholding the law made the expansion optional. Since then, governors in nearly half of all states have refused to take it up.
As a result, small businesses in states that choose not to expand could be liable for billions in federal tax penalties that companies in states that expand Medicaid will not have to pay. "We're strongly advocating that businesses in non-expansion states not be punished," said Kevin Kuhlman, legislative affairs manager for the National Federation of Independent Businesses. …
In states that choose not to expand Medicaid, small businesses may be liable for substantial penalties they would not have had to pay if the expansion had remained mandatory, according to a recent analysis by Brian Haile of Jackson Hewitt Tax Service. Based on actuarial estimates of the number of low-income workers who would have qualified for Medicaid in the 22 states that so far have said they will not expand, Haile estimated that small businesses could be liable for as much as $1.3 billion in penalties each year. In Texas alone, the penalties could amount to as much as $448 million each year, Haile wrote.