There has been widespread concern amongst small businesses in the United States in the wake of the House passage at the weekend of the Affordable Health Care For America Act that the planned reforms will adversely impact them, although in fact, proposed penalties for failing to offer healthcare coverage to employees will only be imposed if a business has more than 50 employees.

With the complex legislative mechanisms that have been - and remain so, ahead of a Senate 'reconciliation' vote - necessary to ensure that President Obama's flagship reforms pass, it is hardly surprising that many of the United States' nearly 30 million small businesses are confused about the impact, if any, that the legislation will have on them and their employees.

The legislation levies a 40% excise tax on insurance companies and plan administrators for any health coverage plan with an annual premium that is above the threshold of USD10,200 for single coverage and USD27,500 for family coverage, effective from 2018.

It also increases the Hospital Insurance (HI) tax rate by 0.9% from 2013 on an individual taxpayer earning over USD200,000 (USD250,000 for married couples filing jointly). The provision also broadens the HI tax to include net investment income in the taxable base in the case of a taxpayer earning over USD200,000 (USD250,000 for a joint return). Net investment income is defined as interest, dividends, royalties, rents, gross income from a trade or business involving passive activities, and net gain from disposition of property (other than property held in a trade or business).

Beginning in 2011, the bill also imposes an annual flat fee on the pharmaceutical manufacturing sector according to market share. This is expected to raise USD2.5bn in 2011, rising to USD4.2bn in 2018, before falling to USD2.8bn in 2019 and thereafter. A similar fee is to be levied on the health insurance, raising USD8bn in 2014 and rising to USD14.3bn in 2018.

Under the new legislation, insurers will no longer be able to decline a person insurance coverage on the grounds that they have a pre-existing medical condition (this will apply from 2014 for adults, but from this year for children), and must base premiums on tobacco use, age, and location, rather than on health status.

Additionally, expensive plans (defined as those costing more than USD10,200 for a single person, or USD27,500 for family coverage) will become subject to what it is being called a 'Cadillac' tax, of 40% on the cost of the plan exceeding those thresholds; although this is to be paid by the insurance firms themselves, higher premiums for policyholders are almost certain to result.

Of most interest to small businesses is likely to be the penalties aspect of the reforms, which, from 2014, will oblige businesses with more than 50 employees to pay a per-employee penalty for failing to offer access to a healthcare scheme offering a designated minimum array of services and covering 60% of health costs for employees.

Enterprises with fewer than 50 employees will not face penalties, however. By 2014, state authorities must set up 'SHOP Exchanges' (or Small Business Health Options Programs), to allow businesses with less than 100 employees (although this may be limited by the states to businesses with less than 50 workers until 2016), and the self-employed, to buy insurance coverage as a group, and hopefully benefit from reduced costs as a result. Tax credits are also set to be made available for eligible small businesses purchasing health insurance in this way.

Until such exchanges are in place, tax credits are to be available at 35% of insurance costs for businesses with fewer than 10 full time employees (earning less than USD25,000 annually). Slightly larger enterprises (with between 11 and 25 employees, earning an average yearly wage of USD50,000) will also be eligible for credits, albeit at a reduced rate.

As the White House announced on Tuesday that President Obama would sign the reforms into law shortly, various Republican figures, led by Floridian Attorney General, Bill McCollum, announced their intention to challenge the legislation in the Supreme Court, although commentators have suggested that such an action is unlikely to succeed.

However, Republican foot-dragging in the Senate may delay the progress of the required companion bill, dragging the legislative process out, and creating further uncertainty both for the nation's small (and large) businesses, and for Americans - both insured and uninsured - waiting to see if their situation will be improved or adversely affected by the reforms.