Who's the killer employee under Obamacare? No. 50 or 51?

May 23, 2013: 10:25 AM ET
NEW YORK (CNNMoney)

The employer mandate under Obamacare is clear: Starting in 2014, "large employers" with 50 or more full-time employees must start providing insurance.

"Small employers" near the cutoff have a name for the hire that subjects them to the employer mandate: The killer employee.

Worker No. 50 is the one to watch. But many keep putting the blame on Worker No. 51.

"It is 50-plus employees," confirmed Joanne Peters, a spokeswoman for the U.S. Department of Health and Human Services.

It's a small mistake, but widespread.

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In a Washington Times editorial, Sam Graves (R-Mo.), chair of the House Small Business Committee, wrote: "Businesses that cannot afford the fine won't hire a 51st employee."

Analyst Dennis Gartman blamed health reform for holding back new hires in a recent interview on CNBC. "Anybody who has a small business with, let's say 47, 48, 49 workers, is not going to add the 51st," Gartman said.

Even this report by the Kaiser Family Foundation initially got it wrong, and that organization is widely known as the best source information about health care reform (it has since been corrected.).

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The employer mandate is at the crux of a debate about whether Obamacare will hold back hiring.

Blaine Luetkemeyer, a Republican representative from Missouri, says he hears routinely hears that complaint from businesses in his district, including car and aircraft manufacturers. "They would like to expand," Luetkemeyer said. "Because they're at 55, they're not sure whether to expand or lay people off, or cut hours."

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In reality, though, the mandate will apply to only a tiny share of businesses -- about 3%. And the vast majority of them already provide health insurance.

Still, for those subject to the employer mandate, the costs are real.

Business owners will face one of two options: start paying for insurance or face fines. Insurance costs employers an average of $4,132 per single plan in 2011, according to Kaiser. Opting for penalties will cost $40,000, plus $2,000 for each uninsured full-time worker past 50.

Those near the 50-worker cutoff make up a slim minority of the nation's companies. Only 60,000 of the nation's 5.7 million businesses have between 40 and 49 employees, according to U.S. Census data.

Spreading false rumors and mistakes about the health care law only causes confusion that hurts business owners, John Arensmeyer argues. He leads Small Business Majority, a lobbying group for entrepreneurs who support Obamacare.

"There's tremendous amounts of misinformation. Some of it's deliberate, and some of it's out of ignorance. But it's creating a very unhelpful environment, impeding the ability of small business owners to really learn what's in the law," he said.

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