Buckle up: IRS gears up to impose Obamacare’s ‘Cadillac’ tax

For now, it’s just a new reporting requirement:

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. The value of the employer’s excludable contribution to health coverage continues to be excludable from an employee’s income, and it is not taxable. This reporting is for informational purposes only and will provide employees useful and comparable consumer information on the cost of their health care coverage.

In five years, however, the IRS will use the information on the W-2 forms to impose a hefty 40 percent “excise tax” on so-called “Cadillac” employer-provided health insurance plans:

It begins at $10,200 for an individual plan and $27,500 for a family plan. Above that, there’s a 40 percent tax on the excess premiums. So if your plan is valued at $11,200, your employer will pay a 40 percent tax on the $1,000 surplus.

Those thresholds sound high at the moment, but health care costs are rising rapidly. A family health plan that costs $18,000 today will cost $29,000 in 2018 if costs rise 10 percent per year during the next five years.  Moreover, the thresholds will rise more slowly than health-care costs, which means the number of plans that are taxed will steadily increase after 2018.

So, a tax that was supposed to affect gold-plated plans belonging to wealthy fat cats will likely end up  many affecting middle-class workers.  A study by the Pioneer Institute estimates that the tax will eventually be imposed on the health insurance benefits of more than 50 percent of Massachusetts workers, including small business owners, teachers, and police officers.

A school superintendent in Litchfield, Minn., is already looking ahead:

  • SineWaveII

    “. Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable.” …Yet

  • HARP2

    Libs wanted it…you got it. Now pay up.

  • http://twitter.com/thetugboatphil TugboatPhil

    Funny how expensive “free” stuff is. And by funny, I mean sadly pathetic.

  • mickeyco

    In 5 years, just maybe, we might not have to worry about Ocare. I can dream, can’t I?

    • ZoriahShepard

      It’s not a bad dream to have.

    • JustLikeAnimals

      I agree. It’s not a dream. Hussein himself will shortly meet with Dem congressional leaders to have them introduce changes and amendments to the ACA. Nancy passed it and now that they see what’s in it, there is likely no one who is going to stand in the way of changes.

  • grais

    Am I reading this correctly? The employers will pay the tax?

    That ensures that employers, to lower or avoid the tax, will offer next-to-useless healthcare coverage, doesn’t it?

    • JustLikeAnimals

      Yup. That’s why they’ve been hacking jobs over anticipated ACA costs. Who can afford that?

  • nc

    Question: Who is going to enforce all these new regulations that, even if law abiding citizens want to obey, are impossible to keep up with?

  • Bad things coming

    Ah, if this is news to anyone they have been in a coma for the past few years…..

    • Grumpa Grumpus

      @Amanda StThomas-Mather:

      Which guarentees it will be news to all the little Proggie voters.

  • Joe W.

    Bend over, y’all….get ready for more of that “shared sacrifice”….

  • dwsmokin

    Anyone find it funny that the same admin that wanted the rich to pay their “fair share” will tax employees for employer provided “cadillac” plans, but not the wealthy who buy their own? Do these idiots ever talk to each other before they start writing their inane legislation? Or do they just come up with what they think is brilliant, and shout it from the rooftops? Sad commentary on our times that a majority of Americans think (or thought) that this assortment of intellectual orphans have the all the answers.