Recently, we told you about some of the immediate tax consequences that you, as a business owner, can expect because of the Supreme Court’s decision on health care reform. If you read How Does the Health Care Reform Decision Impact Your Business, you know that your healthcare costs and Medicare taxes are likely go up. But, did you know that you might need to pay more for Medicaid, too?
The Supreme Court struck down the part of the Affordable Care Act which would have forced states to expand Medicaid to all people living below 134% of the poverty level. The court ruled that the federal government does have the right to expand Medicaid, but that it cannot use the coercive means written into the act to force states to expand their Medicaid roles against their wills.
What Does This Mean for Ohio?
Now, all states need to decide if participating in the Medicaid expansion is right for them. Ohio officials are currently deliberating how the state will respond to Medicaid expansion and considering how the proposed increase in Medicaid spending will impact Ohio’s economy in both the short and long term.
Regardless of Ohio’s decision on the expansion, the state’s Medicaid roles are expected to expand dramatically as people sign up for Medicaid to avoid the new taxes on the uninsured. (This increase will largely come from people who are already income-eligible for Medicaid, but do not currently choose to participate in the program.) According to Lt. Gov. Mary Taylor, this increase alone will cost the state $369 million in 2014.
What Does This Mean for You?
While the federal government has promised some funding to states that participate in the Medicaid expansion, it is not providing funding to cover the costs of the additional sign-ups mentioned above. Ohio will need to find a way to cover this $369 million in 2014 and every year thereafter. And, that’s where you, the taxpayer, come in.
The state has not yet announced how it will pay for the costs of these new Medicaid enrollees, but a few methods seem likely. The state could increase taxes or fees, cut expenses from other parts of the budget or go after oil and gas revenues. Depending on the method(s) chosen, your business could find itself subject to an increased tax burden.
Count on Rea’s Tax Team to Keep You Informed
Rea’s tax team is following this developing story and will let you know Ohio chooses to handle Medicaid expansion and how this decision will impact your business. We’ll keep you informed of Ohio’s developing tax policy and what tax strategies you can use to mitigate your tax burden. Visit Rea’s website or check back here on DearDrebit for continuing information.
Contact Rea & Associates to discuss how the healthcare decision could impact you or your business. We’ll work with you to explore how the healthcare changes impact your short- or long-term business or tax plans.
