Obamacare Cadillac Tax on High-End Health Plans

[omni550]

NYT article on a provision of the Obamacare legislation, called the Cadillac tax, which penalizes companies that offer high-end health care plans to their employees.

"While most of the attention on the Obama administration’s health care law has been on providing coverage to tens of millions of uninsured Americans by 2014, workers with employer-paid health insurance are also beginning to feel the effects. Companies hoping to avoid the tax are beginning to scale back the more generous health benefits they have traditionally offered and to look harder for ways to bring down the overall cost of care.

Although the tax does not start until 2018, employers say they have to start now to meet the deadline and they are doing whatever they can to bring down the cost of their plans. Under the law, an employer or health insurer offering a plan that costs more than $10,200 for an individual and $27,500 for a family would typically pay a 40 percent excise tax on the amount exceeding the threshold."

http://www.nytimes.com/2013/05/28/b...=1&_r=1&partner=rss&emc=rss&utm_source=feedly

omni

 

[M Paquette]

Under the law, an employer or health insurer offering a plan that costs more than $10,200 for an individual and $27,500 for a family would typically pay a 40 percent excise tax on the amount exceeding the threshold."

Um. A GROUP policy, the sort of thing that an employer might buy, for $10,200 per individual is likely to be a pretty darn good policy, Platinum or better. (I say likely because group quotes do consider the employee mix. If the company consists of nothing but 70 year and older male smokers, I suspect the rate would be higher.)

I suppose someone on a crazy high end plan like this might be upset at part of their premium over the cap being taxed, but what percentage of the population is actually affected? The most expensive plan I can get through our HMO, with a $25 co-pay for a doctor visit or hospitalization, and no deductible, is $8511/year.

 

[M Paquette]

Um. A GROUP policy, the sort of thing that an employer might buy, for $10,200 per individual is likely to be a pretty darn good policy, Platinum or better. (I say likely because group quotes do consider the employee mix. If the company consists of nothing but 70 year and older male smokers, I suspect the rate would be higher.)

I suppose someone on a crazy high end plan like this might be upset at part of their premium over the cap being taxed, but what percentage of the population is actually affected? The most expensive plan I can get through our HMO, with a $25 co-pay for a doctor visit or hospitalization, and no deductible, is $8511/year.

It looks like this is aimed at those goofy 'executive' plans, for CEOs and whatnot, that include things like annual full body MRI scans and 24 hour on-call attending physicians.

 

[omni550]

Perhaps this might also include some union-negotiated plans, I've heard some of them are rather generous.

omni

 

[killingme]

I can tell you that my current coverage in the public school system will be considered Cadillac, no goofy coverage, but extensive.

 

[travelover]

I can tell you that my current coverage in the public school system will be considered Cadillac, no goofy coverage, but extensive.

DW is an educator and used to have Cadillac coverage. Obama Care or not, everyone is getting shifted in the Yugo coverage, just because of the cost pressures.

 

[FIRE'd@51]

Perhaps this might also include some union-negotiated plans, I've heard some of them are rather generous.

This is the primary source of Cadillac plans. In fact, the reason the compliance date was pushed back until 2018 was to keep union support for Obamacare.

 

[Bikerdude]

Just a guess, but I bet the employer of the U.S. Congress will pay the tax for them.

 

[ziggy29]

The worst thing (IMO) about the Cadillac tax is that the value threshold is not indexed for inflation. Not the rate of health care inflation, not even the CPI. It's basically like the AMT has been -- something that will (unless reformed) increasingly hit the middle class hard.

 

[Lakewood90712]

I can see this as a bad thing for small groups with older workers. Many will have to turn to the state exchange , but loose choice of carriers in doing so.

My employer has been able to get good rates with a large group 35k employees and about 15k more dependants in the healthcare group, with the employee paying 100% of dependant insur. Everyone employed by the city, union and not, has the 3 same plans, Blue Shield PPO, or HMO and Kaiser HMO. The Kaiser HMO plan costs the most. Being government , with low employee turnover, the group average age is about 40. On c.o.b.r.a., the cost for the PPO with RX, ( so called gold plan) is just under 600/mo. per person when I checked cost in March.

 

[kmt1972]

My megacorp insurance policy is very good and I am certain is considered Cadillac plan. I am fearful that megacorp will scale down the plan or more likely will require employees to pay for part of it as currently we pay nothing. Good thing this does not hit until 2018 when I should be in semi-retirement and I guess I will have to pay 2K-3K. We will see.

 

[gauss]

You can check your 2012 W-2 form for the value of your employer sponsored health insurance. It is located in Box 12 code WW.

This will give you a feel for how close your current plan is to a "Cadillac" Plan.

FWIW, many self-funded group plan use the same formula for this (reporting on W2 form) as they do for calculating COBRA premiums (less the 2% COBRA markup)

-gauss