Health Care Reform Questions

[Big Time]

I'm doing my best to keep up on the latest Healthcare reform developments being that I feel it will have a profound impact on not only myself but America as a whole. Maybe we can use this thread as a question and answer forum since I feel like there are a lot of intricacies within the two proposed bills that are unclear to people of lesser intelligence like myself.

First question: What is this so called “Cadillac” tax? What does it mean to tax a 40% levy on health insurance benefit plans valued at $8,500 for individuals and $23,000 for families? I have an insurance plan through my company but how do I know how much it is worth? I just don’t understand how they come up with these values for plan benefits and who incurs the tax? Is it the healthcare companies or is it the individuals?

 

[clayinaustin]

Labor angry over Obama-backed insurance tax

Big Labor is very upset with Obama and the Senate version of the health care bill. The "Cadillac Tax" will affect their current health plans.

Labor angry over Obama-backed insurance tax

The 40 percent tax would fall on employer health plans worth more than $8,500 for an individual or $23,000 for a family. Although Obama terms them "Cadillac" plans, union leaders say numerous working-class Americans who've negotiated good benefits in exchange for lesser pay would be hurt.

Trumka and other labor leaders strongly prefer the approach taken in the House health care bill — an income tax increase on individuals earning over $500,000 a year and households earning over $1 million.

 

[Big Time]

So when they use the word premium, I guess they mean the total cost for insurance for that one indiviual/family. See, I know my employers pays a good portion of my premiums, so I don't really know what the total cost of my plan is but I can bet that it is over $8500. So lets say this tax goes through and my insurance co is hit with a 40% tax above that $8,500 threshold. The insurance company incurs those costs, which they then are going to pass onto the consumer (me). So how does this make health insurance more affordable? I must be missing something here right?

And on another note, didn't Obama say during his campaign that his healthcare reforms wouldn't change your existing plan? Isn't an increase in my cost of healthcare insurance a "change" or does that not count as a change because it is only my money?

 

[Ted]

So when they use the word premium, I guess they mean the total cost for insurance for that one indiviual/family. See, I know my employers pays a good portion of my premiums, so I don't really know what the total cost of my plan is but I can bet that it is over $8500. So lets say this tax goes through and my insurance co is hit with a 40% tax above that $8,500 threshold. The insurance company incurs those costs, which they then are going to pass onto the consumer (me). So how does this make health insurance more affordable? I must be missing something here right?

And on another note, didn't Obama say during his campaign that his healthcare reforms wouldn't change your existing plan? Isn't an increase in my cost of healthcare insurance a "change" or does that not count as a change because it is my money?

Oh no, they won't charge your ins company, they will tax either YOU or your employer for having such a great plan, and so it comes from YOUR pocket no matter what.

 

[Big Time]

BTW, not trying to turn this into a rant and rave (or worse...a political thread), but there are some really serious issues with this bill that need to be discussed and made fair.

 

[clayinaustin]

BTW, not trying to turn this into a rant and rave (or worse...a political thread), but there are some really serious issues with this bill that need to be discussed and made fair.

The bottom line is this... Government is not a "value added" entity. Since it does not create wealth, it can only transfer wealth. If the government gives something (money, health care, etc.) to someone who didn't earn it, it has to take away from someone who did earn it.

A new health care law (reform bill) will be passed. Nothing can stop it. The only question will be, "Who will pay for it?" Big Labor has a great health care system that they negotiated in years past. They don't want to give that up. Big Labor will rant and rave, but they won't abandon the Democratic party, and the Democrats know this.

It is anyone's guess what the final bill will look like, but I can guarantee that Obama will sign anything they pass. :willy_nilly:

 

[Ted]

BTW, not trying to turn this into a rant and rave (or worse...a political thread), but there are some really serious issues with this bill that need to be discussed and made fair.

Then I shall remove my snide comment :sifone:

 

[Big Time]

Then I shall remove my snide comment :sifone:

Not at all, especially when your seem to have to right idea. I think it is really important to know what the bill proposes and more importantly the impact that it will have. It is equally important to know how your elected officials are voting on these issues, especially with the coming elections.

 

[CRC]

I am self employed and have been without health insurance since 1993. I want to continue to take responsibility for my own medical costs. I do not wish to spend $8,000 or so annually to participate in socialized health care. I also do not want to be taxed thousands of dollars annually to opt out. I sure hope this BS doesn't pass. I can't afford it.

 

[sledge]

Strictly guessing here, but as to the mechanics of taxing I think it'll work like this:

For those that have insurance through their employer, insurance premiums won't enjoy 100% deductibility like they do now. If they're not already, your total insurance cost will be added to your income line. If the amount exceeds the taxable threshold, then the amount subject to tax will be shown and the appropriate tax will be added to your withholding amount.

 

[sledge]

A lot of people have no idea just how much it costs their employer for their health insurance. The bigger the company, the better the plan, the more they pay. $8500/yr is just over $700/month and it's highly likely that if your company is big/successful enough to pay your insurance, they're paying this much or more...meaning you'd be subject to the tax.

Has anybody read the detail about the timing of actual implementation? last I heard was they'd start taxing sooner than the actual effective date of the rest of the changes. The most positive thought I have is that all of it can be changed back once these fruitcakes are booted out of Congress.

 

[Big Time]

Strictly guessing here, but as to the mechanics of taxing I think it'll work like this:

For those that have insurance through their employer, insurance premiums won't enjoy 100% deductibility like they do now. If they're not already, your total insurance cost will be added to your income line. If the amount exceeds the taxable threshold, then the amount subject to tax will be shown and the appropriate tax will be added to your withholding amount.

Just so I understand your thinking....let's say as an individual I have a $100k a year salary and my insurance premiums are $10k a year, but I only pay 5k and my employer pays 5k. At the end of the year, I would be taxed on that $1500 (10k-8500 threshold)?

 

[Wobble]

I am self employed and have been without health insurance since 1993. I want to continue to take responsibility for my own medical costs. I do not wish to spend $8,000 or so annually to participate in socialized health care. I also do not want to be taxed thousands of dollars annually to opt out. I sure hope this BS doesn't pass. I can't afford it.

So if you, God forbid, came down with cancer and racked up over 500k in medical bills as my son did, who pays for your free ride?

 

[BBB725]

I know my employers pays a good portion of my premiums, so I don't really know what the total cost of my plan is but I can bet that it is over $8500.

I cover my employees, currently $1500 deductible:

Single is $450/month or $5400/year

Employee and spouse is $575/month or $6900/year

Employee and children is $750/month or $9000/year

Family is $1400/month or $16800/year

On top of this I pay 80% from the $1500 to $5000

 

[Chris]

8 grand a year for single individual coverage would besome very comprehensive coverage. I don't know any emplyer that would be offering that sort of package.

 

[clayinaustin]

8 grand a year for single individual coverage would besome very comprehensive coverage. I don't know any emplyer that would be offering that sort of package.

Big Labor does

 

[Big Time]

Healthcare costs also vary by location. The northeast where I am traditionally has much higher healthcare costs then other area's of the country.

 

[sledge]

Just so I understand your thinking....let's say as an individual I have a $100k a year salary and my insurance premiums are $10k a year, but I only pay 5k and my employer pays 5k. At the end of the year, I would be taxed on that $1500 (10k-8500 threshold)?

I'm not up to speed on what the actual income/premium thresholds and what exactly would be taxed. But generally yes, that sounds like the way it would work.

 

[sledge]

8 grand a year for single individual coverage would besome very comprehensive coverage. I don't know any emplyer that would be offering that sort of package.

Fortune 1000 cos which probably employ the bulk of non-public "covered" individuals. PPO coverage with minimal deductibles (<=$1k) and low co-pays.

Every public employee is covered by a private health insurer also. Don't expect for a second the ins cos cut municipalities a break on premiums. Call the finance department of your local municipality and ask them what they pay for ins premiums. Be sitting down when you get the answer.

HMO coverage is going to be cheaper.

 

[rbhudelson]

one thing everyone needs to keep in mind about this is you can't just throw out a blanket number and call it good. There are a lot of things that go in to calculating premium. 2 really important factors are age and men/women ratio. So you can have two equal plan designs in two identical companies that have radically different premiums. For example, if company A's average age is 24 and mostly male their premium will be significantly lower than the same company with the same average age but is predominately female. The older you are the higher your premium is going to be. Along the same lines, the same company with the same Male to Female ratio but a 2 or 3 year increase in average age will have a significantly higher premium.

So the same plan design could trigger the excessive tax in one company and not in another. Some of the other factors that go into the calculation is location, type of business (SIC), network, claims experience, Percent on COBRA etc, etc, etc.

people have lost sight of the fact that insurance is to protect you against a mathematically calculable unknown risk. Once it becomes known, well there is not much insurance can do - because it is only downside after that.