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catoismymotor (33.80)

Employee Benefit News: New health care law likely to raise benefits costs

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March 23, 2010 – Comments (11)

New health care law likely to raise benefits costsBy Lydell BridgefordMarch 22, 2010  

While the health care legislation passed by House Democrats on Sunday expands coverage to 32 million Americans, the measure is bound to increase the costs of employer-sponsored health benefits.

With the 219-to-212 vote, the House enacted health care legislation that imposes a 40% excise tax on employers that provide high-end insurance coverage, which would take effect in 2018. Companies with health plans that have premiums of $10,200 or more for singles and $27,500 for families are subjected to the tax. The House measure also requires employers with 50 or more workers to provide affordable health insurance or pay a penalty of up to $3,000 per worker.

Government economists estimate that the new health care law comes with a price tag of $938 billion over 10 years. Employers and employee benefits analysts assert that the government will most likely raise business taxes and fees on health insurers, pharmaceutical companies and medical-device manufacturers to foot the bill.

Most corporate leaders and business owners believe that those industries will then levy the costs of the taxes and fees onto their companies, resulting in higher premiums or reduced benefits for workers.

LINK TO ARTICLE

 

 

11 Comments – Post Your Own

#1) On March 23, 2010 at 8:59 AM, catoismymotor (33.80) wrote:

I cut and pasted only have the article. More can be read at the link at the bottom of what I posted.

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#2) On March 23, 2010 at 9:09 AM, pepperjack2020 (< 20) wrote:

What you fail to indicate is the possibility of expense reductions for businesses. A penalty of $750 or $2,000 is far less than the average cost of more than $4,000 per year, according to several benchmark benefit studies. Radically less than the "Cadillac" benefit programs quoted above. Our small company (less than 100 employees) could save over $500,000 per year by jettisoning health insurance and paying the penalty. We can re-invest that money to grow the business and hire more people.

How many companies are spending $10K for singles and $27K for families? It's less than 10% of the companies. 90% are spending far less and won't see the excise tax. 

 

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#3) On March 23, 2010 at 9:18 AM, catoismymotor (33.80) wrote:

What you fail to indicate...

You are mistaken if you think I penned the article. I merely posted it for all to read and to do with as you please.

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#4) On March 23, 2010 at 9:19 AM, catoismymotor (33.80) wrote:

BTW: have = half.

Where is that coffee mug?!

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#5) On March 23, 2010 at 1:55 PM, lemoneater (78.89) wrote:

My health care coverage with my job is currently very good, but I'm sure that there will have to be some changes in the plan.

Since I had good health and my parents were the opposite of wealthy, I never even had health insurance until I was in college. I wonder how the implementation of the legislation will effect those who currently do not have insurance because of good health and less money.

I guess I will have to go with plan B and take more of my vacation time doing healthy activities like hiking in the mountains.

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#6) On March 23, 2010 at 2:38 PM, catoismymotor (33.80) wrote:

Lemon,

It sounds like a nice excuse to spend some time walking the trails and having fun in Asheville.

Cato

P.S. - I never found my coffee mug. :(... 

 

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#7) On March 23, 2010 at 3:02 PM, lemoneater (78.89) wrote:

Perhaps hiding our coffee mugs is part of the new health care plan:). Did you look under your desk?

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#8) On March 23, 2010 at 3:23 PM, outoffocus (22.85) wrote:

I am currently under what would be considered a "cadillac plan".  I don't think employees understand the scope of what qualifies as a "cadillac plan".  Most employees under employer sponsored plans only pay 1/3rd of the medical insurance premium per paycheck and therefore would be unaware that they may already be under a "cadillac plan".  That $10200 premium broken down would be just $141 per paycheck, which some are paying already.  Further, since this doesn't take effect until 2018, this number does not factor in inflation or premium increases (which are allowed under the new healthcare plan). Ultimately this excise tax will have the same effect on the middle class as the AMT.  While its proposed under the guise of "taxing the rich", its really taxing the mess out of the middle class, which will result in lowered healthcare for a good portion of the middle class  and/or loss of benefits.

If someone is young, healthy, and single, it may just be cheaper to pay the fine for not having the insurance.

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#9) On March 23, 2010 at 3:45 PM, devoish (98.38) wrote:

Most employees under employer sponsored plans only pay 1/3rd of the medical insurance premium per paycheck and therefore would be unaware that they may already be under a "cadillac plan.

That's a big "may" in there. I am pretty sure you could simplify that statement while simultaneously increasing its accuracy into something like this: Very few employees are getting anything near a $10,200 policy taxable for singles.

Most employees with family policys aren't gettiing anything near a $27,000 policy taxable for them.

And to all the conservative/libertarian/republicans out there, I would think that eliminating this portion of a tax incentivized "distortion" of markets would be a good thing.

 

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#10) On March 23, 2010 at 3:53 PM, starbucks4ever (97.42) wrote:

Of course it's likely and even certain to raise costs. That's what the fines are for. With a $1000 fine the cost of a policy will be raised by $1000. With a $2000 fine the price will go up by $2000. With a $10000 fine the price will go up by $10000. The relation between the  the cost increase and the fine is a thing of beauty: a straight line with the slope equal to 1. By looking at the increase of the fine at any given year you can immediately find out the rate of premium increase scheduled by Obama & Co for that year. Economics is a simple science, isn't it?

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#11) On March 23, 2010 at 6:56 PM, TMFLomax (40.75) wrote:

Thanks for the post/comments... I am having a REALLY hard time figuring out why so many people are throwing a party over this. It does seem like a burden and yeah, like a massive tax on middle-class folks who already say they can't afford health care/health insurance. It feels like Bizarro World or something... don't get it. 

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