Louisiana businesses could pay substantial tax penalties starting in 2015 because of Gov. Bobby Jindal’s rejection of Medicaid expansion, according to a new report by a national tax preparation firm.
Jackson Hewitt estimated the penalties could range between $41 million and $62 million annually.
“States that do not expand Medicaid for adults leave their large employers exposed to higher employer ‘shared responsibility’ tax penalties” that are part of the federal Affordable Care Act, the study found.
A clause in the 2010 federal law penalizes some employers when their employees aren’t able to obtain affordable medical coverage through their company. The provision affects employers with 50 employees or more and sets out a maximum $3,000 per employee penalty.
The employers don’t have to pay the penalty if their employees qualify for Medicaid expansion coverage. States have the option of expanding Medicaid to cover adults with annual income up to 138 percent of the federal poverty level. The federal government pays 100 percent of expansion costs for the first three years and continues to pay at least 90 percent thereafter.
Jindal rejected Medicaid expansion, claiming the current program is broken and down-the-road it will become costly for state taxpayers.
Democratic lawmakers and some community activists continue to push for the expansion.
The penalties could total $1.03 billion to $1.55 billion each year in Louisiana and the 24 other states that have not signed up, based on the analysis by Jackson Hewitt, a national tax accountants’ company.
Jackson Hewitt recently issued the report “State Medicaid Choices and the Hidden Tax Surprises for Employers.”
In a blog post, the Louisiana Budget Project commented: “Millions of dollars in unnecessary tax penalties for some Louisiana businesses could be coming in 2015 due to Gov. Bobby Jindal’s ill-advised decision to block access to health coverage for hundreds of thousands of low-income workers ... Making matters worse, many employers are likely not aware that the state’s lack of action on health reform will end up costing them.”
Last year, Jackson Hewitt estimated that collective tax penalties for Louisiana employers potentially could range from $51.7 million to $77.5 million annually.