The Dreaded Cadillac Tax…coming to a health plan near YOU!

March 12, 2015

Uncategorized

     While Republicans and Democrats do not seem to agree on anything these days, there is one provision of ObamaCare that they both despise — the so-called Cadillac tax on generous health plans.

     With the uproar growing louder with each passing week, this may even present an opportunity for Republicans in Congress to woo enough Democratic votes to pass changes to ObamaCare and overcome the President’s likely veto.

     While it does not go into effect until 2018, there are signs that companies are already cutting health benefits to stay under the Cadillac line.

     As far back as 2009, the president said he wanted to penalize “fancy plans that end up driving up costs.” Obamacare adds on a 40% tax on these plans starting in 2018. In reality, it’s not just the rich that have these plans, but in fact there are countless blue-collar and union workers that are enrolled in these generous benefits that have been negotiated instead of wage hikes. There are also thousands of plans offered thru the local Long Island school districts for teachers that will likely fall into this category as well.

     It is suggested by some that by 2018, about half of companies will have to pay the tax if they do not restructure plans considered “excessive”: $10,200 for individuals and $27,500 for families. According to a recent study by the benefits group Towers Watson, companies are already raising deductibles and copays or skimping on coverage.

     Union leaders weren’t fooled. According to a recent Fox News report, three large unions, including the Teamsters, sent a letter to congressional Democrats in 2013 warning that the tax “will destroy the very health and well being of our members.”

     While only time will tell what the impact of this tax on excessive plans will be, you can be sure that as health insurance costs continue to outpace inflation, the percentage of citizens falling into the ‘Cadillac Tax-Pit’ will only continue to grow. If and when this problem gets fixed is anyone’s guess.