The Obamacare Cadillac Tax Plan Blocked

By |2018-01-12T06:36:06+00:00December 4th, 2015|Taxes|

59 Cadillac Eldorado isolated on white.The furor over the Obamacare health plan continues to be at the forefront in congress.  The Affordable Care Act (ACA) has been facing a difficult time when it comes to costs, expenses and funding.  Recently a large insurance provider threatened to pull out of the program, leaving many other companies to wonder exactly how this program will flourish.  Currently there are about 15,000,000 enrollees in the ACA and many of the state pools are seeing larger than expected increases in premiums being paid.

The US Senate recently voted 52-47 for a House version of a bill that will have a major impact on the ACA.  One key component of the ACA funding was making those with higher income pay an extra premium expense; this is known as the “Cadillac” Tax.  This would cause employers a massive tax headache as they imposed the additional tax on higher earning employees. According to the IRS, a health insurer administering the tax cannot deduct the excise tax amount from its own taxable income; the full amount a company will expect to get from an employer for paying the tax may be about 60 percent bigger than the tax payment itself.

The bill would also cancel the ACA individual coverage mandate, the ACA employer coverage reporting requirements, the ACA employer coverage mandate requirements, and the ACA medical plan excise tax.  The loss of this key funding puts the future of the ACA in doubt.

The combination of the increased costs and the non-deductibility of the expense for company sponsored health plans would have created a monster accounting issue and driven up employee cost for nearly all (50 and more employees) companies in America.  If the bill is actually signed into law, the costs to tax payers for the burden of financing the ACA could be enormous.

Combining the increase in premiums, the tremendous cost of administration and the uncertainty of exactly what the future holds could spell the end on the ACA in its current form.  Any final changes and how the ACA will ultimately look will almost certainly be left to the next administration and its working relationship with congress.

US Senate majority leader McConnell said: “Americans are living with the consequences of this broken law and its broken promises every day. Its negative effects are often felt in the most personal and visceral ways. And Americans are tired of being condescended to.”

The Obama Administration responded: “the major proposed Senate amendments to the bill would result in millions of individuals remaining uninsured or losing the insurance they have today.”

Here is more information about the recent US Senate vote:  http://www.lifehealthpro.com/2015/12/03/senate-passes-ppaca-blocker-bill?

 

About the Author:

Bill Broich
Bill Broich is a well-known annuity expert with over 30 years of experience. He has written hundreds of articles on annuities and other financial topics, and has been a featured commentator on TV, Radio and the Internet. To follow Bill's profile, click here.