Question

[amfh]

Is there a new 4% federal tax on employer paid insurance plans to pay for obamacare?
I'm seeing this on a certain rightwiingnut website.

 

[JuliefromOhio]

cadillac plans will be taxed. it's an effort to discourage companies from offering these very expensive plans.

here's a link explaining it to some degree. it's not crystal clear to me yet.

http://www.kaiserhealthnews.org/stories/2010/march/18/cadillac-tax-explainer-update.aspx

 

[colfax]

cadillac plans will be taxed. it's an effort to discourage companies from offering these very expensive plans.

here's a link explaining it to some degree. it's not crystal clear to me yet.

http://www.kaiserhealthnews.org/stories/2010/march/18/cadillac-tax-explainer-update.aspx

Thanks Julie, for that link before worldly jumps in here with a post headed, "Obama to tax health plans to pay for Obamacare"

 

[amfh]

cadillac plans will be taxed. it's an effort to discourage companies from offering these very expensive plans.

here's a link explaining it to some degree. it's not crystal clear to me yet.

http://www.kaiserhealthnews.org/stories/2010/march/18/cadillac-tax-explainer-update.aspx

Thanks, Julie, I *thought* these comments I've seen must have had their genesis in the Cadillac Plans tax, but wanted to make sure before I responded....
I still can't figure what the 4% reference they make is in regard to....
I couldn't even find a reference to a rightwingnut site when I googled the exact phrase.

 

[Arkady]

cadillac plans will be taxed. it's an effort to discourage companies from offering these very expensive plans.

here's a link explaining it to some degree. it's not crystal clear to me yet.

http://www.kaiserhealthnews.org/stories/2010/march/18/cadillac-tax-explainer-update.aspx

It's a reasonable provision. You don't want companies and high-level workers avoiding paying taxes by reducing salaries and just giving that compensation in the form of other benefits that don't get hit by income taxes. I mean, picture if my company cut my salary by 5%, but used 4/5 of that to enhance my health insurance policy to cover fancy trips to health resorts (essentially, free vacations), and all manner of exercise toys, and designer eyeglasses, and cosmetic surgeries, and a gym with a free daycare, etc.

They could pocket 1/5 of the savings for themselves, and meanwhile I'd come out pretty much even (although I'd be getting only 4/5 of the previous value, it would be untaxed, so the take-home value would be the same, for me). So, it would be a win for my employer and a net-neutral for me, but it would hit tax revenues, by pulling that 5% of my compensation out of the income tax base. We don't want to encourage that. It makes more sense to tax me on it as income, and then let me decide which of those luxuries I want to buy with the after-tax income. As long as the general rule is that health insurance benefits aren't taxed as regular income, it makes sense to have a rule to prevent businesses from using that to hide compensation from taxes, by providing Cadillac plans.