A wealth of new taxes appeared when the Affordable Health Care Act (Obamacare) was signed into law. The taxes affect a wide range of businesses, products and services, from tanning salons and medical devices to name brand medications.
Penalties were placed on investment income, health savings accounts, people without healthcare insurance, and “Cadillac” insurance plans.
One of the penalties that generated the most concern among taxpayers is the 40 percent tax on what’s known as Cadillac insurance plans that feature low co-pays, deductibles and premiums.
Contrary to popular belief, the tax on “luxury” policies won’t be assessed against consumers.
The penalty will be levied on companies that offer the plans, but consumers will certainly experience repercussions as a result.
The tax officially takes effect on companies in 2018, but many employers are already taking steps to avoid paying the penalty. The tax affects all employer-sponsored health insurance that exceeds a value of $10,200 for individuals and $27,500 for families.
It hits any high-end gold or platinum policy that’s not purchased on the government’s Healthcare Insurance Marketplace.
Employers are assessed the tax if they provide workers with benefits considered too expensive by the authors of Obamacare.
Many employers are scrambling to rid themselves of the policies they’ve offered workers in the past and replace them with plans that increase the cost of deductibles, premiums and co-pays to employees.
Learning The Value Of A Dollar
Obamacare was written with the assumption that workers didn’t know or care about the true cost of their healthcare insurance, and that employer-provided policies encouraged overutilization of benefits and unnecessary tests.
With Obamacare, workers will know the exact cost of the policy when it’s included on their W-2s, when their deductibles increase, the cost of their co-pays double or triple at the doctor’s office, and dental/vision care is reduced or eliminated.
Obamacare is concerned with the physical health of patients. Dental and vision care aren’t considered essential.
By raising patient costs, Obamacare hopes to limit/reduce the number of visits people make to their physician as a means of reducing healthcare costs and curbing overutilization of expensive tests and services.
Trading Lower Wages For Insurance
In many instances, taxing employers that offer exceptional healthcare policies actually penalizes employees who have chosen to work for lower wages in exchange for better healthcare.
The taxes on businesses could add others to the pool of Marketplace purchasers, as employers stop offering benefits and dump workers and retirees into the Marketplace to find insurance.
Exemptions For Some
Exemptions from the tax have been negotiated for those in certain industries that include law enforcement, paramedics and first responders, and those providing out-of-hospital emergency services.
Also included in the exemptions are individuals doing longshore work, mining, construction, people in the fishing industry, forestry and agriculture (excluding food processing).
The Positive Aspects – A Mixed Bag
The other side of the Obamacare coin is that free preventative tests and screenings encourage people who already have insurance to use the services of their physicians, along with an estimated 30 million new patients who will be covered through Marketplace policies.
Medical professionals fear the influx of that many patients will seriously compromise the level of patient care and effectively reduce access to healthcare overall.
Businesses offering “Cadillac” insurance policies will shoulder the burden of Obamacare penalties on those plans.
As patients, employees will experience the trickle-down effect in the form of higher co-pays and premiums.