Protect Affordable Healthcare for Small Businesses: Extend ACA Tax Credits Now

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Dear Speaker Johnson, Majority Leader Thune, Minority Leader Jeffries and Minority Leader Schumer: 

On behalf of Small Business Majority, the undersigned state and national organizations and small business owners from across the country, we urge Congress to extend the Affordable Care Act’s (ACA) enhanced premium tax credits (PTCs) which are claimed by nearly 3 million small business owners and have been critical in lowering out-of-pocket healthcare costs for millions of individuals enrolled in the Marketplace, including small business owners, self-employed entrepreneurs, and small business employees. If Congress fails to act, millions of individuals will see their monthly premium costs skyrocket overnight, leading to an estimated loss of coverage for more than 4 million Americans. 

Small businesses and their employees continue to struggle to access affordable healthcare coverage in the face of rising costs that prevent many of our nation’s smallest employers from offering health coverage to their employees. While nearly all (98%) larger businesses with 200 or more employees offered healthcare benefits to their employees in 2023, just 50% of businesses with 3-49 employees and 39% of businesses with 3-9 employees offered healthcare benefits to their employees.  This leaves approximately 10 million solo-entrepreneurs, small business owners and their employees purchasing healthcare coverage in the individual market. 

For those small business owners and workers purchasing individual coverage, the Affordable Care Act (ACA) Marketplace has played an essential role in expanding access to affordable healthcare coverage for the small business community. In fact, the ACA has been a game changer for small businesses nationwide—expanding healthcare coverage and lowering costs for small business owners, their employees and solo entrepreneurs. Small businesses represent a lion’s share when it comes to enrollees in the ACA, comprising more than half of all ACA marketplace participants. 

While the ACA has made great strides in expanding affordable coverage to millions of small business owners and their workers, the gains that small business owners have made by accessing ACA plans are owed particularly to the successful expansion of premium tax credits approved by Congress in 2021 and then extended in 2022. The tax credits, originally passed in 2010, excluded all individuals and families making more than 400% of Federal Poverty Level (about $62,000 annually). Many small business owners have income slightly above this level, leaving them totally ineligible for the premium tax credits. In 2021, Congress temporarily increased the amount of these tax credits for those who were already eligible while also removing the arbitrary income cutoff by expanding eligibility to individuals with income levels above 400% of the FPL, thus expanding eligibility to many middle-income small business owners. In 2022, Congress later extended these tax credits through the 2025 tax year. These enhanced tax credits have cut premium payments by an estimated 44% ($705 annually) for marketplace enrollees who claim the PTC.  

Improvements to the PTC have not only cut premium payments nearly in half, saving individuals hundreds of dollars annually, but have also expanded access to these credits and healthcare coverage overall. This is especially true for entrepreneurs. According to the most recently available data from the U.S. Department of the Treasury, 4.4 million small business owners and self-employed entrepreneurs were covered by the Marketplace in 2022, compared to just 2.6 million one year prior in 2021.  82% of small business owners and self-employed entrepreneurs enrolled in the Marketplace in 2o22 claimed the PTC, including nearly 300,000 taxpayers who would have otherwise not been eligible for the PTC due to their incomes being over 400% of the poverty line.  Additionally, the uninsured rate of small business employees and self-employed individuals dropped to record lows in 2022 thanks in part to PTC improvements. If Congress fails to act by extending these credits, even if only temporarily, American business owners will suffer in the short and long-term.  

If these tax credits expire, Marketplace enrollees will see their premium payments increase overnight by an average of 75% and even double in some cases. The Congressional Budget Office (CBO) also estimates that 4.2 million individuals will become uninsured if the enhanced tax credits expire.  Higher premiums and a larger uninsured population will have far-reaching impacts on the broader individual marketplace as more individuals will find themselves with coverage plans they can’t afford or without coverage altogether. This will lead more individuals to neglect treatment until it reaches an emergency, at which point hospitals will care for the uninsured in an emergency room setting. And when the uninsured cannot pay those hospital bills, hospitals will be forced to pass those costs to those with insurance.  

It isn’t too late to act. Congress faces multiple opportunities throughout the end of this year to make good on its promise to support small businesses, entrepreneurs, and Main Street-oriented communities in rural and small-town America. The impact resulting from a failure to act would be nothing short of catastrophic. We call upon Congress to support our nation’s small business community by ensuring that our nation’s job creators have the opportunity to access quality and affordable healthcare options. Healthy businesses are sustainable businesses, and without support from Congress, our business community will pay unimaginable debts to an already broken healthcare system. 

We urge you to work on a bipartisan basis to affirm the critical importance of these credits and to act swiftly to extend them for the sake of American Main Street everywhere. Thank you for your time and consideration on this important matter.