This is going to take time before it becomes ingrained in all of us that there is this not only opportunity to get health insurance, but its also the law that they’re supposed to have It”, he said.
During an August 24 meeting in Lovell, the Wyoming Legislature’s Joint Labor, Health and Social Services Interim Committee learned about problems the tax will pose for Wyoming employers, including the state and local governments, beginning in 2018. That money comes out of employees’ paychecks, and they’re not able to use it for other expenses.
That means students on the plan may face fines from the government for not having a qualifying health care plan.
Ralph Hayes, manager of the Wyoming State Group Insurance Program, said rate projections show the state will hit the Cadillac tax thresholds in 2018 and will have to pay about $4.3 million. The same goes for employers with unionized workers who won better benefits through bargaining. Hillary Clinton, the front-runner Democratic presidential candidate, says she’s concerned and would re-examine the tax. The requirement on companies that size was initially slated to take effect in 2014 but was delayed, with additional uncertainty due to last spring’s U.S. Supreme Court decision on a challenge to Obamacare.
Conservatives are right to oppose numerous reforms of the Affordable Care Act, but the Cadillac tax is its one provision that adheres to conservative precepts. That’s down from 16.8 percent previous year.
The peak year when respondents said they failed to seek healthcare for costs reasons was also 2009 to 2010, when it was 6.9%.
“It is a pretty broad-based tax that has a powerful effect on controlling the growth of premiums”, said Larry Levitt, a co-author of the report.
According to the Kaiser Family Foundation, one in four employers will be affected by the looming tax increase since insurance premiums are expected to rise quicker than inflation.
The Obama administration says such studies overstate the potential impact. After all, how can something be a “Cadillac” plan if one-quarter of employers’ plans are threatened in year one? The tax is levied on insurers and plan administrators, who are expected to pass it back to employers. The rate had hovered around 85 percent for more than a decade, though it fell as people lost jobs in the recession.
That the Cadillac tax is in the crosshairs of conservatives is maddening; allowing employers to provide health insurance tax-free to their workers is awful policy, a truism that any honest economist-whether liberal, conservative, or otherwise-would agree with. Measures such as ditching flexible spending accounts may not be enough.
ACA does not require businesses with fewer than 50 employees to pay for health insurance, but they must notify their people about the public health insurance exchange in their states where families can find affordable options. But he and other defenders of the law have it backwards: Taxes, subsidies, and regulations distort the health care market driving costs up.
Here’s how the tax works (we’ll try to keep it simple, although the mechanism is extremely complicated): Employer health-related benefits whose costs exceed the average by a certain amount will be subject to a tax on the overage.
But if an employee has his or her contribution deducted from their paycheck, it could potentially trigger the tax.
Date: September 6, 2015