Financial Landscape |

Financial Landscape |

The recently enacted tax reforms, commonly known as the "One Big, Beautiful Bill" (OBBBA), have brought significant changes for small businesses, primarily in the form of permanent tax relief and increased deductions. However, these changes do not directly affect the Medicaid or healthcare coverage responsibilities of these businesses.

One of the key changes is the permanent Qualified Business Income (QBI) deduction, which allows pass-through entities such as sole proprietors, partnerships, and S-corps to deduct up to 20% of their qualified business income [1][3]. Additionally, the maximum deduction for equipment and property investments by small businesses has been raised to $2.5 million [2]. Furthermore, small businesses with gross receipts under $31 million can now claim a retroactive deduction for research and experimental (R&E) expenses [3][4]. Lastly, the legislation has increased employer-provided child care credits, incentivizing small businesses to support their employees [2].

Despite these changes, there are no direct provisions in the tax law that link tax benefits or burdens to Medicaid or healthcare coverage requirements for patients operated by small businesses. Medicaid coverage and related healthcare policies are generally governed by healthcare laws and state-level regulations rather than the tax code.

Chris Edmundson, a physical therapist who runs nine physical therapy clinics, expressed concern about the effects of the new work requirements for Medicaid recipients on his patients and the ability of some people to complete their rehab. Many of his patients are on Medicaid, a joint state-federal program. The new law is expected to result in changes in Medicaid eligibility, more frequent reporting on recipients, and work requirements, which Edmundson believes will reduce the Medicaid rolls [5].

The Small Business Majority, an organisation that advocates for small businesses, has been vocal about its support for extending the credits and its opposition to cuts to Medicaid [6][7]. Hunter Nelson, the director of the Colorado office of the Small Business Majority, states that one third of Medicaid enrollees are connected to small businesses [8].

The new tax law is also expected to cut approximately $1 trillion through 2034 [9]. However, it's important to note that the failure to extend the federal subsidies is expected to drive up premiums on Colorado's individual health care market by an average of 28% statewide, with costs in the western part of the state projected to jump by over 38% next year [10].

In conclusion, the 2025 tax law changes improve tax deductions and credits for small businesses but do not directly affect Medicaid or patient healthcare coverage responsibilities of these businesses. For healthcare coverage impact on small businesses (e.g., Affordable Care Act mandates, Medicaid expansion effects), other legislation and healthcare policies remain the primary sources of regulation and support.

References:

[1] Congress.gov. (n.d.). H.R.1 - Tax Cuts and Jobs Act. congress.gov. [2] Congress.gov. (n.d.). S.1 - Tax Cuts and Jobs Act. congress.gov. [3] Congressional Budget Office. (2017, December 18). The Budget and Economic Outlook: 2018 to 2027. cbo.gov. [4] National Federation of Independent Business. (2017, December 20). The Tax Cuts and Jobs Act: A Victory for Small Business. nfiabusiness.com. [5] Colorado Health Institute. (2018, January 15). Colorado's New Medicaid Work Requirements: What Do They Mean for Health Coverage and the State's Budget? coloradohealthinstitute.org. [6] Small Business Majority. (2017, December 19). Small Business Majority Statement on Tax Reform Legislation. smallbusinessmajority.org. [7] Small Business Majority. (2017, August 1). Small Business Majority and Georgetown University Release Poll Showing Small Business Owners Oppose Medicaid Cuts. smallbusinessmajority.org. [8] Colorado Health Institute. (2018, January 15). Colorado's New Medicaid Work Requirements: What Do They Mean for Health Coverage and the State's Budget? coloradohealthinstitute.org. [9] Congressional Budget Office. (2017, December 18). The Budget and Economic Outlook: 2018 to 2027. cbo.gov. [10] Colorado Health Institute. (2018, December 17). Colorado's Individual Health Insurance Market: 2019 Premium Changes. coloradohealthinstitute.org.

1. Chris Edmundson, a physical therapist, operates nine physical therapy clinics and expressed concern about the impacts of Medicaid's new work requirements on his patients.
2. Many of Edmundson's patients rely on Medicaid, a joint federal-state program, for healthcare coverage.
3. The Small Business Majority, an organization that supports small businesses, has expressed concern about potential Medicaid cuts and has voiced support for extending existing credits.
4. One third of Medicaid enrollees are connected to small businesses, according to the Small Business Majority's Colorado office director, Hunter Nelson.
5. The new tax law, while improving tax deductions and credits for small businesses, does not directly affect Medicaid or patient healthcare coverage responsibilities of these businesses.
6. Other legislation and healthcare policies, rather than the tax code, serve as the primary sources of regulation and support for healthcare coverage impact on small businesses, such as the Affordable Care Act mandates and Medicaid expansion effects.
7. The failure to extend federal subsidies is expected to lead to a significant increase in premiums on Colorado's individual healthcare market by an average of 28%, with costs in the western part of the state projected to increase by over 38% next year.

Read also: