Cadillac Tax

[sman]

August 10, 2015 The IRS (probably at the direction of the President) is adjusting the Cadillac Tax to stick to health insurers that sell/administer top quality plans, rather than companies that buy them. Excerpt: "The IRS says the entity providing health coverage is liable for the Cadillac tax. That would be the employer for health savings account (HSAs) and Archer medical savings accounts (MSAs). But for health coverage provided for an insured group health plan, the coverage provider is the health insurance issuer." Source: New IRS Guidance Suggests Obamacare 40% Cadillac Tax Could Get Even Worse ac

So if the insurer will be responsible for it, then we might kiss Cadillac plans goodbye. If they still offer them then the premiums will increase to cover the added expense.

Yet another unintended consequence. Or was it intended all along?

 

[RayNY]

So if the insurer will be responsible for it, then we might kiss Cadillac plans goodbye. If they still offer them then the premiums will increase to cover the added expense.

Yet another unintended consequence. Or was it intended all along?

Correct me if I'm missing something (I'm no morning person), but won't they have to justify the increase? I presume they won't be allowed to get that large of an increase without a reason.

Not to mention, if they raise premium to cover tax, they'd owe more tax on that increase as well.

 

[sman]

Correct me if I'm missing something (I'm no morning person), but won't they have to justify the increase? I presume they won't be allowed to get that large of an increase without a reason. Not to mention, if they raise premium to cover tax, they'd owe more tax on that increase as well.

Which is why we may see an end to Cadillac plans.

 

[leevena]

Correct me if I'm missing something (I'm no morning person), but won't they have to justify the increase? I presume they won't be allowed to get that large of an increase without a reason.

Not to mention, if they raise premium to cover tax, they'd owe more tax on that increase as well.

Still awaiting IRS guidance on this, but my bet would be that the carriers do not include the excise tax on their rates, but rather will add it as an additional charge for "tax". Carrier is essentially a conduit for billing/collection/payment.

 

[AllenChicago]

Still awaiting IRS guidance on this, but my bet would be that the carriers do not include the excise tax on their rates, but rather will add it as an additional charge for "tax". Carrier is essentially a conduit for billing/collection/payment.

That sounds logical. If the Caddy Fee were added to premiums, it would increase revenue to the point where some companies would have to effect MLR rebates. What a complex law, just to get someone health insurance!

 

[RayNY]

Still awaiting IRS guidance on this, but my bet would be that the carriers do not include the excise tax on their rates, but rather will add it as an additional charge for "tax". Carrier is essentially a conduit for billing/collection/payment.

Can't add it as an additional charge over premium; that would mean the carrier is a flow-through and the consumer is paying the tax (exactly how sales tax works).

The law clearly doesn't say the tax is placed on the consumer.

AC, you raise a great point, this tax would entirely be on the administrative side of MLR and not the medical expense side. I can't see how any of these plans could comply with MLR if the tax must be paid from premium.

 

[AllenChicago]

You're gonna pay for that-Obamacare's Cadillac Tax

August 28, 2015

"According to a new report by the Kaiser Family Foundation, a nationally known nonprofit focusing on health issues, the tax will apply to 26 percent of the nation's health insurance plans when it finally takes effect in 2018"

"What's more, the number of plans affected by the Cadillac tax is projected to grow steadily in the future. Absent any changes, the Kaiser report shows that 30 percent of the plans could be liable for the tax five years after it kicks in and 42 percent another five years down the road."

Source: Report Predicts Danger Ahead on Health Care Insurance Cadillac Tax

I wonder what will go away first... This Cadillac-luxury tax, or health insurance agents?

Obama calls contemporary health insurance "junk", then slaps a 40% surcharge tax on the best plans, to discourage people from owning them.
No logic whatsoever.

 

[AllenChicago]

Excerpt:
"And one of the first things to go will be Flexible Spending Accounts. The reason is that ObamaCare inexplicably includes worker contributions to an FSA as though they were part of the premium. Let's say an employer offers a plan with a $9,000 premium, and a worker puts $2,700 into an FSA. ObamaCare would treat that as an $11,700 premium, which means it would be subject to the Cadillac tax."

From: ObamaCare Tax Will Cost Workers Their Flexible Savings Accounts - Investors.com

If the Cadillac tax survives, it will be interesting to see who ends up paying it... Employers or Insurers. Most media says Employers, but some say it will be the Insurance Company itself.