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Eleanor Kennedy

Staff Reporter- Nashville Business Journal

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Tennessee's decision not to expand Medicaid could lead to dramatic tax increases for employers, a new Jackson Hewitt study finds.

When the Affordable Care Act was drafted, Congress assumed that individuals under 138 percent of the federal poverty level would be eligible for Medicaid expansion, the study explains. But when the Supreme Court ruled that states could choose not to expand Medicaid, a larger than expected group of people -- those falling between 100 and 138 percent of the poverty level -- became eligible for premium assistance tax credits.

Those tax credits are supported by the shared responsibility federal tax penalty for employers, a fine of up to $3,000 in tax penalties employers must pay for each full-time employee who qualifies for the tax credits. These penalties were delayed by the U.S. Treasury for one year, but they will begin to be enforced and collected in 2015, according to the study.

Here's a quick breakdown of some of the study's key findings for Tennessee:

61,000: Number of uninsured Tennesseans, age 18-64, working full time who fall between 100 and 138 percent of the federal poverty level

24,000: Number of those Tennesseans eligible for tax credits

$2,000-$3,000: Amount employers will be charged per employee who enrolls in the tax credit program

$48 million - $72 million: Potential Tennessee employer shared responsibility tax penalty

The study also notes that while the ACA guarantees that the federal government will pay 100 percent of the costs of Medicaid expansion through 2016, states that have expanded the program will become responsible for 5 percent of those costs in 2017 and 10 percent starting in 2020. According to the study, "Paradoxically, state government efforts to constrain Medicaid cost growth in and after 207 may lead to higher net taxes for employers in such jurisdictions beginning in 2017."

Eleanor Kennedy covers Nashville's health care and technology industries.