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Washington Watch - September 23, 2009


Senate Analyzes New Health Care Overhaul Bill

Senate Finance Committee Chairman Max Baucus, D-Mont., last week unveiled his plan to overhaul the health care system. Since its release, many lawmakers have spoken out that the tax subsidies for those who are required to buy coverage are not generous enough to make coverage affordable. The NASE is very disappointed to see that no amendments have been offered to help ease the health costs faced by millions of self-employed business owners.

"Once again, Congress has proven that it's happy to pay lip service to the self-employed," said NASE Executive Director Kristie Arslan. "However, when it's time for action, the nation's smallest businesses are denied the assistance they desperately need to afford health coverage."

After meetings with concerned Democrats and Republicans, Sen. Baucus released a list of changes he will be making to the existing bill. Those changes include:

  • Reducing the percentage of income that would have to be spent on employer-sponsored insurance in order for it to be deemed “unaffordable,” thus making individuals eligible to buy coverage from an insurance exchange and receive subsidies for the premiums. The threshold may be reduced by 1 percentage point from the current proposed 12 percent of income.
  • Reducing the penalty for not having insurance, maybe by as much as half. The current proposed annual penalties, depending on income, range from $750 to $950 for individuals and from $1,500 to $3,800 for families.
  • Increasing the minimum annual insurance premium that would be subject to the proposed excise tax on expensive health plans (currently $21,000 for families, $8,000 for individuals).

As it stands, the bill is estimated to cost $774 billion over the next 10 years, according to the Congressional Budget Office (CBO). The agency predicts that that cost will be offset by reductions in Medicare spending. A tax on high-deductible insurance plans and additional fees for insurers, drug and medical device manufacturers, and clinical laboratories will round out the revenue raisers in the bill.

Click here to see a current list of amendments.

Frequently Asked Questions On Small Businesses

Last year, there were 29.6 million small businesses in the United States, according to the Office of Advocacy's FAQ on small businesses. As the research arm of the Small Business Administration, the Office of Advocacy periodically updates their popular informational sheet as new data on small firms becomes available. The FAQ answers such questions as:

  • What is a small business?
  • How important are small businesses to the U.S. economy?
  • How many businesses open and close each year?
  • What is the survival rate for new firms?
  • What research exists on the cost and availability of health insurance?

Frequently Asked Questions is located at:

Employee Vs. Independent Contractor – Ten Tips for Business Owners From The IRS

If you are a small business owner, whether you hire people as independent contractors or as employees will impact how much taxes you pay and the amount of taxes you withhold from their paychecks. Additionally, it will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them.

Here are the top ten things every business owner should know about hiring people as independent contractors versus hiring them as employees.

  • Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.
  • Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
  • Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.
  • The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
  • If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
  • If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors.
  • Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
  • Workers can avoid higher tax bills and lost benefits if they know their proper status.
  • Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8 – Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding – with the IRS.
  • You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employer's Supplemental Tax Guide; Publication 1779, Independent Contractor or Employee; and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS Web site or by calling the IRS at 800-829-3676 (800-TAX-FORM).

For more information, visit

Small Biz Health Care Roundup

Here's a sampling of this week's top health care reform articles. If you find an article or blog that you think should be considered, drop us a line at

Lawmakers and media outlets across the country rely on and regularly cite the NASE as a source of small and micro-business expertise. Help the NASE make sure the micro-business perspective is heard by taking this month’s poll.

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