Small businesses are collectively a huge source of hiring potential. A vast majority of workers are hired, not by large companies, but by small and relatively local ones. However, as they grow, these small businesses are struggling with the costs that they can incur as they grow. For example, the Affordable Care Act (ACA) requires businesses that have more than 50 employees to offer healthcare options or face a penalty. Yet a bill was passed in 2015 that would assist companies who chose to hire veterans and provide a benefit that related to the ACA. What is it?
Hire More Heroes Act of 2015
The Hire More Heroes Act was created to encourage small businesses to hire more veterans. Those veterans that already had health care coverage through TRICARE or the Veterans Administration would be exempt from that employer’s limit of fifty employees. As a result, the employer could hire more individuals before they reached the limit where they had to provide healthcare and incur those costs.
This is beneficial for small businesses, as many of them find health insurance costs to be highly cost prohibitive in today’s marketplace. Therefore, businesses may limit the number of employees they choose to hire based on those costs. While some do not make their hiring decisions based on the ACA and their potential to exceed the fifty employee limit, there are still many businesses that do take it into consideration.
There is the assumption that hiring veterans cost more than hiring average workers, according to a statement by Representative John Boehner, though there no evidence to support that conclusion. However, veterans have been documented as having a higher rate of unemployment. Therefore, in some respects, this bill was meant to address that by offering small businesses an incentive to hire veterans.
Potential Benefits for Small Businesses
As we have mentioned, this incentive gives small businesses the ability to expand their staff without expanding their healthcare costs. However, there are still the costs that a standard employee incurs, such as Social Security taxes, income taxes and other hiring expenses. If your business was in no danger of reaching the fifty employee limit, then the law will probably provide little incentive to your company.
However, for companies that are looking to hire employees but are much close to the limit, then the law can provide a way to meet their hiring needs without incurring either a penalty or the additional costs of providing healthcare.
Critisism of the Act
However, there are those who would argue that this Act is not really going to assist veterans for a few reasons. The first is because veterans are not suffering from a high unemployment rates. In 2014, post 9/11 veterans only had a 7.2%, according to the Military Times. Therefore, unemployment is not truly an issue for this group. The bill also ignores what most managers consider when hiring their employees. The reality is that they are often looking for specific skill sets, essentially the best fit for their needs.
While many businesses do take advantage of any tax benefits or other perks that are tied to hiring veterans, these veterans are often already getting hired based on their skill sets. Companies really thrive based on the employees that they choose, which are typically the most intelligent, hard-working employees. It would be foolish from a business standpoint to hire an individual based strictly on the potential financial benefits, especially if that individual is not providing a substantial benefit to the business in any other area.
There are arguments that veterans are best served by increasing the civilian business owners’ understanding of the different skill sets that veterans can bring to the table. These individuals can provide a multitude of benefits to various companies, but only if they are a good fit for that business in the first place.
Transitions for Veterans
While the process of veterans transitioning from military life back to civilian life may be challenging, but in many ways they are just the same that anyone does through the during a career change. Therefore, some would argue that the best effort for veterans would be to encourage funding for career counseling and coaching as they transition into the new workforce. However, for small business owners, the current act does provide an incentive for them to hire an individual that they may have hired without it.
With your own small business, it is important to weigh your hiring decisions, but at the same time, there are definitely incentives and tax benefits to hiring certain classes of individuals.
Allan J Rolnick, CPA, CTC