Revenue from the tax will help pay for the health-care overhaul, which is expected to extend coverage to millions of uninsured or underinsured Americans.

However, because most large corporations self-insure their workforce, experts warn that insurance companies will pass the costs directly to small businesses. The vast majority purchase coverage in the fully insured market.

“Insurers have confirmed back to me that the tax will be passed down to consumers, and the direct impact will be staggering,” Ryan Thorn, owner of a small insurance planning firm near Salt Lake City, told lawmakers during a congressional hearing Thursday. “It disproportionately hits individuals and small-business owners, the people who have been hurt most by these challenging times.”

During his testimony, Thorn read letters from his small-business clients about the likely impact of the new health insurance tax. One wrote that the tax “scares the daylights out of us,” while another warned that it would likely “hasten the decision to move away from providing group coverage for our employees.”