I like to live somewhere between realism and optimism, especially when it comes to politics and healthcare. This attempt doesn’t always hold up though, especially when I learn about things like the Cadillac Tax. And no, it’s not about cars, who knows where the name came from.
Last week I spoke to benefits advisor and expert to the stars Paul Ashley of FirstPerson Advisors who told me some pretty disturbing news. There is a new Affordable Care Act tax on the horizon which has some seemingly unintended consequences.
“The Cadillac Tax is actually a type of excise tax that can be levied on a company which provides health insurance to its employees. If a company provides health care coverage with a value in excess of $10,200 to an individual or $27,500 to a family, then the excess spending will be taxed at a 40 percent rate. The tax is paid by the employer. The Cadillac Tax provision goes into effect in 2018. Part of the thinking of the provision is that it will reduce unnecessary spending on medical care, and encourage both employers and employees to make wise financial health care decisions. It’s the old carrot or stick idea.” (courtesy of Indy Star)
And while the facts mostly speak for themselves, the natural follow up question is how does this impact me and you? If your health insurance is provided by your employer it will severely impact you. Sure the tax is on your employer but they will find ways to pass this cost off on you. This will likely come in the form of downgrading your coverage to a less comprehensive plan at a higher cost. Yeah.
This will likely be a huge issue in the 2016 election. Understanding it now will help you follow the issue as it develops. Paul is seriously good at explaining these complicated benefits issues so I highly recommend you check out his segment on The Pete the Planner Radio Show here.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.