Cadillac Health Plans Taxation
December 30, 2009
First, you must understand what a Cadillac health plan is before we go any farther. The Cadillac Heath tax plan is not only a disaster for Tulsa’s economy but our nation’s as well. The United States Senate Finance Committee defines this plan as a “health insurance plan with yearly premiums higher than $8,000 for individuals or $21,000 for families.”
In December of 2009, a study was published that found that high-cost health plans do not provide extraordinarily expensive benefits to enrollees. The research conducted showed that 3.7% of the variation in the cost of family coverage in health plans sponsored by employees is attributable to differences in the actuarial value of benefits whereas only 6.1% of the variation is attributable to the mixture of benefit design and plan type.
The sad news is that the new insurance provisions suggested by the US government plan on taxing individuals they believe have Cadillac health plans.
Senator Max Baucus proposed the idea to aid in raising money for the overhaul of America’s health care, which is to place a new excise tax on the “most expensive health insurance policies, like the ones offered to partners at Goldman Sachs and other affluent professionals.”
The tax should raise more than a quarter of the $774 billion that is needed for the Baucus plan to work. The tax is a way to discourage the overly generous coverage that some experts are blaming for the problems in medical care.
The problem is that if you look across America you are going to find premiums in all kinds of ranges according to the location a family lives, the type of jobs they perform, and so on and so forth. The Cadillac plans that Baucus is considering includes many of our coal miners, firefighters, and older employees at small businesses, and many more. We are not just talking about billionaires but middle class citizens that do not have the extra to pay for healthcare.
The way it will work is that if you are now paying more than $8,000 your individual or $21,000 for your family plan, your insurance company would have to pay a 35% excise tax on any amount you pay over that amount. This does seem crazy, as the national average premium at this time is $13,375 for a family policy as reported by the Kaiser Family Foundation. Remember, this is average, so there are many above this amount.
According to a report by the Center on Budget and Policy Priorities, around 1 in 10 family insurance plans will be subject to this excise plan. What is going to happen when insurance companies have to pay this excise tax? They are of course going to put the burden on their customers.
Harold A. Schaitberger, the general president of the International Association of Fire Fighters, stated, “It puts a bigger tax on middle-income Americans who are already paying enough.”
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