States choosing not to expand medicaid may cost their employers over $1-billion in federal tax penalties annually.
The connection between federal tax penalties and Medicaid expansions maynot be clear to many, but these penalties could be costly to employers in states that do not expand Medicaid for adults.
National tax preparation firm Jackson Hewitt Tax Service released a report thismorning on this topic entitled "State Medicaid Choices and the Hidden Tax Surprises for Employers."
These were some of the findings revealed in the study.
States that do not expand Medicaid for adults leave their large employers exposed to higher federal tax penalties under the ACA.
The federal tax penalties to employers could total $1.03-billion to $1.55-billion each year in the 25 states that have not yet expanded Medicaid for adults.
By way of example, the decision in Texas to forego the Medicaid expansion may increase federal tax penalties on Texas employers by $266 to $399 million each year. Likewise, employers in Florida may pay $169 to $253 million dollars each year in federal tax penalties if the state does not expand Medicaid for adults.
Any projections of the "net" costs of Medicaid expansions should also reflect the very real costs of the federal tax penalties to employers in states that do not expand Medicaid.