…taxes and fees.
Last week’s newsletter outlined just four major taxes and fees under Obamacare. As previously mentioned, these collected taxes form a portion of the premium assistance subsidies distributed to eligible consumers who purchase individual health plans on the federal government’s health care exchanges.
See the list below for three more taxes and fees the Obama Administration is imposing to redistribute those subsidies.
The Cadillac Tax: The Obama Administration boasts that the individual marketplace will now offer generous, comprehensive health plans. Even single men now have access to maternity coverage. Now, that’s pretty generous. However, employer-sponsored plans will be hit with an Obamacare tax if they offer overly generous health coverage.
Starting in 2018, a 40% excise tax will burden employers who offer coverage that exceeds $10,200 for self-only employee coverage and $27,500 for a worker’s family coverage. A 40% tax will apply for the total dollar amount that exceeds these thresholds. Exceptions will be made for workers with high-risk jobs and retirees not yet eligible for Medicare.
Such luxury plans that employers offer to workers include little cost-sharing and low deductibles. Because these plans are rich with benefits and minimal out-of-pocket spending, supporters believe that the tax will reduce the "moral hazard" of excessive medical care usage.
On the other hand, employees with chronic health conditions benefit from these types of gold-plated plans. Furthermore, the tax could burden more large businesses than originally intended — the monetary threshold will be adjusted based on the consumer price index, but this inflation adjustment will only continue until 2020. Politico’s "Understanding Obamacare" states:
Think of the Cadillac tax as the slow-moving car in the right lane, chugging along at 45 miles per hour. It may be pretty far in the distance, but if you’re an employer and you’re moving along at a reasonable clip in the same lane — say, 60 mile per hour — and you don’t slow down, you’re going to run smack into it."
Medical Device Sales Tax: This is a 2.3% sales tax on medical devices that are manufactured within and imported into the United States. This Obamacare tax took effect in January 2013 and is projected to raise $20 billion over the next 10 years. While medical devices such as heart monitors, pacemakers, and dialysis machines will be taxed, there are some exceptions. For example, devices made in the United States for export are excluded from the tax, along with individual products sold at retail for individual usage (hearing aids, contact lenses, eyeglasses, etc.).
Exchange User Fee: By 2015, all health insurance exchanges must be self-supporting, putting a stop to further Congressional funding. Ironically, Congress never appropriated any funds to federal exchanges, based on the assumption that states would rather choose to set up their own. The exchange user fee applies to all 34 federally facilitated exchanges (including North Carolina’s) to offset the lack of Congressional resources. As of March 2013, a final regulation was issued that will require both the insurance companies participating in North Carolina’s federal exchange to pay a 3.5% user fee. Blue Cross and Blue Shield of North Carolina states that this tax on premiums "adds significant costs to plans, in addition to the costs added by richer benefit packages."
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