Damnit People, Take a Moment To Inform Yourselves On WHO the "Cadillac Tax" applies to

[berni_mccoy]

It's a tax on the Insurance Company. And because the bill enforces a Medical Loss Ratio of 85%, this tax cannot be pushed onto the subscriber.

Look at the bill, section 9001(c) from http://democrats.senate.gov/reform/patient-protection-affordable-care-act.pdf :

‘(c) LIABILITY TO PAY TAX.—
‘‘(1) IN GENERAL.—Each coverage provider
shall pay the tax imposed by subsection (a) on its
applicable share of the excess benefit with respect to
an employee for any taxable period.
‘‘(2) COVERAGE PROVIDER.—For purposes of
this subsection, the term ‘coverage provider’ means
each of the following:
‘‘(A) HEALTH INSURANCE COVERAGE.—If
the applicable employer-sponsored coverage con-
sists of coverage under a group health plan
which provides health insurance coverage, the
health insurance issuer.
‘‘(B) HSA AND MSA CONTRIBUTIONS.—If
the applicable employer-sponsored coverage con- sists of coverage under an arrangement under which the employer makes contributions de- scribed in
subsection (b) or (d) of section 106, the employer.
‘‘(C) OTHER COVERAGE.—In the case of any other applicable employer-sponsored cov- erage, the person that administers the plan ben- efits.

So, the Health Insurance company is responsible for paying the 40% tax on excessive benefits. And because of the new MLR laws, this 40% cannot be transferred to the subscriber. It is a tax levied, not against the worker, but a tax levied against the company making the profit from the plan. And for those employers who pay any portion of an excessive HSA plan, the employer must pay tax on the excessive contribution limit. That is, if an employee requires more than $8300 in their HSA and the employer pays more than $8300 (locally adjusted) to that plan, the employer will be taxed on that excessive amount. IMO, this is to prevent companies from shoveling excessive amounts into executive plans for write-off purposes, which is currently a tax loop-hole that is being closed by the new bill.

This is why progressives in the Senate are supporting this bill. Because it puts the pressure in the right place, on the Insurance Companies, and won't show up on the paychecks of middle-class workers.

[librechik]

1. Thank goodness! Ofcourse they would never DREAM of passing that cost along

to poor little ol me.

Maybe they won't--but I doubt it.

[Common Sense Party]

2. Law of Unintended Consequences: What will happen NEXT?

[TicketyBoo]

10. There are always unintended consequences

which can be positive or negative.

There are consequences to doing nothing, too.

[Common Sense Party]

13. Great. Agreed. Now, what WILL be the consequences of taxing

the Cadillac plans?

[TicketyBoo]

87. I don't know.

Do you?

We probably won't know unless/until we see it in action.

[gratuitous]

24. "Cadillac" benefits are curtailed?

The only way to buy coverage considered "Cadillac" will be purchase a separate rider, which will operate outside the legislative framework, and the insurance company can charge whatever it pleases for it?

No way! That would totally defeat the stated purpose of the proposed law, would be a really sneaky thing to do, and I can't imagine any insurance company doing such an underhanded thing.

[berni_mccoy]

27. Depends on what the non-profit, state driven plan dictates.

[SoCalDem]

3. They will just start paring-down coverage

Those execs will always figure a way to "get theirs"..

[NJmaverick]

4. Facts matter- Thanks for posting EOM

[Brickbat]

5. Walk me through it like I'm five...

...If the plan subjects them to a tax, what keeps the insurance companies from dropping these plans altogether under the argument that they're not profitable?

[berni_mccoy]

25. The Insurance company can't pass it onto the subscriber because they must maintain

a MLR of 85%. That is, 85% of the income from premiums must go to Medical treatment.

The 40% tax on these expensive plans would not be able to be passed along because it would push the ratio below 85%.

[Brickbat]

29. Right, the tax cannot be passed on, so the insurance company must pay it, I get that.

So what if they argue that it's too expensive or "unprofitable" for them to offer these kind of plans, and shut them down altogether?

[berni_mccoy]

31. Each state is required to run a non-profit plan that meets minimum standards set out by the OPM

This is a backdoor public option. If the Insurance companies want to stay competitive they will be squeezed between charging too much and providing standard care.

[Brickbat]

35. But if I have a better than standard plan that the insurance company shuts down because it's not

profitable enough because of this tax, as I understand it my union and my employer bargain a shittier plan. Maybe it's better than the minimum standards, but it's not nearly as good as my former plan. This is what I see happening.

[berni_mccoy]

37. Better than standard or cadillac? Why are you upset if you are for a public option or single

payer?

[Brickbat]

39. Right now we have outstanding health insurance. It may be more costly, but it is a negotiated cost

that Mr. Brickbat's union has bargained over to get. Prescriptions cost $5. We have no co-pays for office visits. All of our major medical things we've gone through (births, operations) have been covered in an affordable way. We get what we pay for. I'm concerned that the Senate plan will make it evaporate and I'll be stuck with crappier insurance.

[grahamhgreen]

90. You can't be so naive not to understand the "MLR" is whatever the lawyers tell you it is.

[Hello_Kitty]

6. If it's meant to target executives it should account for income and be properly indexed

The CBO projects this tax could affect 1/5 of all health plans in 5 years. Also, many large companies self insure. That is, they hire an insurance company to administer the plans but the pot of money is their own. They're not going to be able to pass the 40% tax off onto the administrator and they will pare back coverage to avoid paying it. These are the companies who employ a lot of the union members with "Cadillac" plans. Also, a lot of state and municipal employees have generous plans that they negotiated for with their unions. You'd be surprised at the number of teachers, cops, and firefighters who have very expensive insurance plans.

[Realityhack]

15. "properly indexed" - Nuff said.

This is the part that gets me the most. I am not a supporter of taxing even the best benefits but even if we did decide to go that direction it seems to me that we should properly index the cutoff point. As the other provisions like pre-existing conditions come into effect I think we will see increases to many plans and at least some of those that do not qualify today will qualify tomorrow. IIRC that is one of the reasons there ARE plans in that price range.
If you want to tax people for the portion of benefits above X then X should be set to adjust over time. Seems simple to me.

[sui generis]

7. it's still a ridiculous place to place a tax.

can we not do the windfall portion with the purpose of DISCOURAGING lavish provider profits, and not confuse that with going after the evil rich?

This plan is still a steaming gutless spineless piece of political dookie.

[berni_mccoy]

28. That's what the tax is. It's a windfall tax on the Insurance Companies.

However, it's been framed by critics as an attack on labor.

[GodlessBiker]

8. Would a labor union that administers its own health plan, with premiums paid into that plan by ...

an employer, have to pay the tax?

[Brickbat]

9. Good point. And as someone who was covered by one of these plans for years,

I'm interested in the answer.

[berni_mccoy]

18. Only if it's an HSA plan that they make excess contributions to (>8300 / year)

[GodlessBiker]

21. So a labor union is treated like an employer. That's real good. Helps workers and all.

[berni_mccoy]

23. I thought you meant the employees of the Union. The union doesn't pay taxes

on members of the Union. Only the Insurance company *or* the employer if they make excess HSA contributions.

[hfojvt]

36. yes. See part B - "the employer"

I still much prefer the house version to the Senate version which is much less straightforward.

[berni_mccoy]

41. Wrong. The employer only pays tax on EXCESS HSA contributions. This closes an HSA tax loophole

that executives have been doing to mitigate their tax bills.

[jpak]

11. NOOooooo it's a tax on *union* benefits by the Evil Corporatist Obama!!!111

Saint Ralphie cannot be wrong!

:evilgrin:

[freddie mertz]

12. Candidate Obama was concerned about the passing on of the tax to employees...

And the possible loss or reduction of benefits. With good reason.

In any case, it is a regressive tax and is not the sort of thing A Democrat should really be promoting.

At least, not when the Dems were a pro-labor party.

[Realityhack]

16. It isn't progressive but I am not sure I would say it is regressive.

Up to the $8.5k (or whatever) the benefits remain untaxed. Even the CBO is saying what 20% of plans? I wouldn't label that as regressive even though I agree it is stupid and hardly progressive.

[freddie mertz]

26. I can agree on "Stupid and hardly progressive."

Does anyone know why the president has been so silent on this particular controversy?

Since he totally flipped his position from a year ago, it might be interesting to find out why.

Was he just lying to us back then?

[Realityhack]

30. No idea.

Honestly I suspect there may be some deal making or bargaining but who knows. The sad thing is that if there IS some legitimate bargaining they wouldn't be able to tell us and if there isn't they would want to stay quiet so the two would look the same.

[berni_mccoy]

32. It's called the run-around. Progressives can't openly put a windfall tax on the Insurance Companies

without the bill getting dinged by moderates. So they are forced to implement something as complicated as this.

[Kansas Wyatt]

14. So you are saying Unions are EXEMPT from the tax?

Please show me where it says that.

[berni_mccoy]

19. Is the union the Health Insurance ISSUER? Are they the employer making excess HSA contributions?

No. They don't pay the tax.

[Kansas Wyatt]

38. My employer pays into a fund, which I am credited with.

The Health & Welfare Fund then purchases a group plan for everyone with credits in the union.

Is the union member in a taxable 'cadillac' plan, with what I described?
If not, then who gets taxed in that type of plan?

Oh, and I fell off of health insurance coverage at the first of the year, because I had not worked enough to have enough credits to be covered and I could not afford to pay a contribution to remain covered.

[berni_mccoy]

51. Do they pay more than 8300 / year per employee in the plan?

[Kansas Wyatt]

61. $7.80 per hour worked is contributed to the Health & Welfare Fund.

So yes, it would be over $8,300 per year.

[Kansas Wyatt]

65. Still waiting for the answer....

Oh, and I have 28 years of personal experience with Type 1 Diabetes. So not only did I take the hit for union contractors competing with non-union contractors, who do NOT provide health care coverage, and became unemployed due to the lack of work, when I do get insurance back, Obama wants to tax me for it. Is that the answer?

[Kansas Wyatt]

66. Your answer?

Are you for or against taxing union members for their health care coverage?

If you are against taxing union members for their health care coverage, then you CANNOT be for Obama's HCR/SHIT Bill.
And that is the bottom line.

[dysfunctional press]

83. my father is a retired union operating engineer- he ran cranes his entire life...

and his union has advised him that the health& welfare benefits that he and my mother share through his union plan will incur him a $5000 tax increase.
he is NOT happy.
he has ALWAYS voted for and supported dems- but he says that if this bill passes- he NEVER will again.
btw- he has diabetes as well..and two artificial knees.

[Kansas Wyatt]

86. Notice the poster has not answered any of my questions.

I don't think Obama & Democrats, Inc. realize what a colossal blundering fuck up they are making, by pissing off union members. A lot of GOTV comes from union halls all over the country.

I've had Type 1 diabetes for 28 years, a crippled leg for 16 years, and other more recent medical issues, and this is the absolute slap in the face to me. After always voting straight Democratic and working my ass off to convince others it was in their best interest to always vote Democratic, this is absolutely unforgivable and the end for me.

To all you DLC rat bastard cheerleaders out there.... Go to fucking HELL! You were given a chance after NAFTA to redeem yourselves and you blew it. Time for you wormy SOBs to stand on your own and do your own fucking work. I do not owe you a fucking thing and you have done NOTHING for me. There is NO difference between DLC and Republican, so your pathetic scare tactic is bullshit... You are all the SAME! After this, I'd rather vote Third Party, rather than DemoRAT.

Sorry... Didn't mean to blow up on you.

[OHdem10]

17. And the Insurance Companies plan to pass the tax on to the public.

[berni_mccoy]

20. As pointed out, they cannot. They are limited by the MLR.

[Realityhack]

33. Not quite...

They are limited by the MLR but that only limits ONE WAY to pass on costs and only after a threshold is met.
They can increase the cost of the plans until that threshold is met, increase deductibles, increase copays, decrease coverage, etc. to get things to work for them. I don't think you can honestly claim that they won't go wandering right up to that line.

[berni_mccoy]

34. They cannot increase the cost of the plan to meet the threshold. The OPM dictates

what can / cannot be claimed by the Insurance company. If the FEDERAL gov't determines a plan didn't meet the MLR, refunds will be submitted to the subscribers. The Insurance Company has no wiggle room here.

[Realityhack]

Ok. I am not sure I followed that.

Unless I missed something the insurance company can increase premiums from year to year still right? Or are there limits on that now?

[Parker CA]

22. K&R. Some people just won't be happy regardless of what it really means. Thanks for the info.

[Romulox]

40. They will simply cut benefits rather than pay the tax.

Which is precisely the intention of the tax in the first place--not revenue generation, but "cost control". Unrec.

[berni_mccoy]

43. Benefits have a minimum standard as set forth by the OPM and will be administered

by each states REQUIRED and state-run non-profit plan.

[Romulox]

44. Those minimum standards fall FAR BELOW the plans in question, and you know it.

:hi:

[berni_mccoy]

46. You're a complete hypocrite then. Do you honestly believe the PO or Single Payer

would have allowed Cadillac plans to remain?

[Romulox]

49. Um, Physician? Heal thyself. This is supposed to be a "let the market decide!" approach,

remember? You're complaining now that the market isn't providing single payer? And calling someone else a hypocrite at the same time? :crazy:

[berni_mccoy]

52. You obviously can't read, or are dodging the question. I'm not complaining, but you on the other han

are a complete hypocrite.

You expect the Cadillac plans to be maintained and yet, know they never would with a PO or SP. Go back to your teabagging hole.

[Realityhack]

54. Why wouldn't they under a PO system? n/t

[berni_mccoy]

55. Because they wouldn't remain competitive. The PO still dictates an MLR of 85%

which many cadillac plans can't maintain anyway.

[Realityhack]

57. Sorry but I lost you there.

You have been making some good points so I am trying to follow along but I got lost.
Why couldn't the higher priced plans maintain a MLR of 85%?
As I see it there are 2 possibilities for a high premium plan:
a) They have a MLR < 85% = They could compete with the PO but must increase benefits to meet the MLR requirement. It seems any plan would rather do that than loose everything to a PO.
b) They have a MLR over 85% = no change and they can still compete because people are still willing to pay that much for the better coverage as a PO would almost certainly not be as good.

Am I missing something? If so what?

[jpak]

63. !

:rofl:

:thumbsup:

[Realityhack]

45. are the $8,500 plans near that minimum standard?

Given the estimate of 20% of plans hitting that number I doubt it... so I would assume there is at least some room for scaling back benefits. I don't think anyone is claiming that the people paying $8.5k are going to get the minimum coverage, just less than they get now.

[berni_mccoy]

47. Would they be with Single Payer or a Public Option? Be honest now...

[Realityhack]

53. Only sort of.

They would have changed completely of course. But everything would change with the conversion single payer. The higher end plans would be converted into Aflac like plans to cover things not covered by single payer or reduce the copay of such plans etc.

The thing is we aren't getting single payer. That conversation is over. The issue is how to pay for the current plan. IMO bringing up single payer at this point is a red-herring.
Should we tax health benefits over $X?
How high a tax?
Should X be indexed?
Who is that going to effect vs. other plans to raise the same revenue?
etc.
those questions do not hinge on a single payer option because we already lost that battle.

[Hello_Kitty]

71. Easily with single payer.

The single payer plan would cover basic health care and unions or employers could offer supplemental plans that cover the extras.

[juajen]

42. Thank you for posting this. This is good information

that I certainly did not know before. Gad, it is extremely hard to understand all the myriad parts of HCR. Thanks for clarifying one, at least.

[sabrina 1]

48. I don't think anyone misunderstood that this was a tax on health

care benefits, and not on individuals. Aside from the fact that Obama promised in the campaign never to impose a tax on benefits, which means he understood the ramifications of such a tax, btw, there are many reasons why this is beyond a bad idea.

Initially, when Obama first indicated that his 'thinking had evolved' on taxing health care benefits, he said he wanted to do so only on the most expensive premiums, 'over $40,000'. He sold the idea claiming it would affect 'Goldman CEOs eg'.

Even that raises a question. Should the government be trying to prevent people from buying the best coverage they can get? That was the stated goal.

But, back to what is actually in the bill. This link explains the controversy fairly clearly:

http://www.politicsdaily.com/2009/12/17/cadillac-tax-in-health-plan-would-hit-middle-class-hard?icid=sphere_blogsmith_inpage_sphere

The levy has been dubbed the "Cadillac tax," but research shows it would likely affect a broad swath of Americans regardless of their income, which could indeed amount to the tax on the middle-class that President Obama promised would not happen under his administration. The tax is a growing source of anxiety for Huber and his co-workers, but also for Democrats in the House, who vow to strip the measure out of the bill in conference or consider bringing the bill down altogether.

The confusion surrounding the tax comes from its complexity and the luxury car it is named for. When President Obama first raised the idea of taxing insurance companies this summer, he framed it as one way to get Wall Street executives to pay their fair share. Obama told PBS' Jim Lehrer he wanted to target "super, gold-plated Cadillac plans." Days later, Obama's senior adviser David Axelrod told The New York Times the administration wanted to tax benefits "like the ones that the executives at Goldman Sachs have, the $40,000 policies."

At the time, Obama said he did not want the tax to hit middle-class families, but when the bill emerged from the Senate Finance Committee in September, it proposed charging insurance companies and a 40 percent excise tax for high-dollar -- but not exactly gold-plated -- plans. The bill now calls for the tax to apply to plans exceeding $8,500 for individuals and $23,000 for families, for the cost of combining health savings accounts, medical, prescription drugs, dental, vision, etc. The tax is charged to insurance companies, but it is widely assumed they would pass it on to employers.

Nancy Pelosi favors taxing the wealthy, millionaires, which would in fact bring in more revenue than this tax is expected to do. Obama's change of mind on this issue was what prompted her remark a few days ago.

This is an ad Obama ran against John McCain accusing him of 'taxing health benefits, taxing YOUR benefits for the first time ever' ~ 'he goes on to call it the 'highest tax hike on the middleclass ever'. Please note, he said 'health benefits' not individuals. I think we understood what that meant and what the ramifications would be to the middleclass. And back then, so did Obama

http://www.youtube.com/watch?v=dNJo0IcJ5oY&feature=player_embedded

I liked that Obama ~ where did he go?

[berni_mccoy]

50. wow, your first sentence is completely wrong. It's a tax on the Insurance Company.

[sabrina 1]

58. Tell that to Obama and Nancy Pelosi, the Unions

who will be directly affected by this tax and every expert on the subject so far. It is a tax on benefits which, if providers make too good, like, eg the kind we pay for to keep Dick Cheney's heart beating, the provider will be taxed and therefore discouraged from providing those 'great health care benefits' that some employers actually did buy for their workers. Or, if you actually read the article, employers will drop those benefits which Unions eg, fought so long and so hard to get for their workers.

A rose by any other name would smell as sweet ~ you can call it whatever you like, it won't change what it is or the opposition to it from all across the political spectrum.

Obama opposed it and for good reasons. His ads against it will be used very effectively against Democrats in a few months.

Anyone who cares about not handing over the election to Republicans will stop trying to defend this attack on the middle class and try to talk some sense into this administration as Pelosi, who fully understands the ramifications for her party, is trying to do.

You are not helping by turning yourself into a pretzel trying to defend the indefensible in spite of all the evidence available. You are merely helping to hand over the biggest weapon they could wish for to the Republican Party and they are rooting for the inclusion of this tax in this bill. Then, they plan to run on repealing it. Which will be a very popular issue in Nov.

Really, you need to start facing reality and try to save this party from itself, because it seems bound and determined to commit political suicide. For a majority of Americans, this isn't about party politics, it is about their lives and their families and now, they are feeling increasingly threatened by this legislation and Republicans will be only too willing to help them with their fears.

Nit-picking about words on the internet is not going to save the Democrats from themselves. I don't know what will, but right now, I'm counting on Nancy Pelosi not backing down.

[berni_mccoy]

59. One word: politics.

[TheKentuckian]

56. Its purpose is to eliminate benefits and shift costs

The entire point is the squeeze this kind of plan out for the masses and over time it will squeeze us all to the minimum standards or there abouts.

[Brickbat]

60. That's how I see it, and no one has convinced me otherwise.

[sabrina 1]

64. Yes, it is a sales tax on people's health care benefits n/t

[berni_mccoy]

67. Dumb. A sales tax is charged to the buyer. This tax is on the Insurance Company.

[sabrina 1]

70. It is on the buyers policy. And the cost will be passed on to

to the buyer as has already been proven.

My sister has what they are calling a 'cadillac plan'. She works for a small family run business who actually do care about their employees. Her plan will be affected by this tax as will all of her co-workers'. Now, her employer is faced with not only paying for costly coverage for his employees, which was a decision he made as a decent human being. Now he is going to be taxed on part of his employees' premiums for doing so. So, what do YOU think he will do? What can he do?

Really, you need to stop trying to defend this. I have a feeling it will not pass anyhow, as Dem. Senators are already in trouble in their districts for their support of other parts of this bill and the election is not far away. Hopefully, Nancy Pelosi will talk some sense into the WH although they have very resistant to sensible suggestions so far. However this tax is so widely opposed, I cannot imagine Senators who want to keep their seats, going along with it.

[berni_mccoy]

72. As has been covered, the cost can't be passed on due to the 85% MLR.

[sabrina 1]

78. That doesn't answer the question I asked in the example

I gave. The employer in that case has a decision to make. I know about the MLR. That doesn't prevent an employer from choosing a policy that will be less beneficial to his employees in order to avoid the tax. This is what the unions are upset about. It will force a reduction in coverage, possibly with more out-of pocket expenses for millions of Americans. No more jobs with 'great benefits'. And that is what it is intended to do. The goal is to NOT provide coverage that the government decides the beneficiaries do not need, in order to cut down on the cost of the care they receive. Who does that benefit?

I can already hear the rightwingers. Government interference in what kind of coverage you can buy.

It was bad enough that this 'marketplace' that people are forced to go shopping in, would discriminate against those who could not buy decent coverage. Now even those who can, are being punished for deciding to try to get the best coverage they can. Everywhere you turn, the government is in your face telling you what you can and can not buy with your own money. Enforced with the help of the IRS ~ this is just plain unacceptable to anyone who believes they have a right to choose on what and where they can spend their own money. It's almost as if someone is trying to destroy the Democratic Party.

[ddeclue]

62. It's just union breaking..that's all it is.

[Stinky The Clown]

68. Berni, c'mon. You're smarter than this ..... unless yur intent is to deceive

Do you really think this tax won't be passed on through even higher rates?

[berni_mccoy]

73. How will it be passed on with an OPM enforced MLR of 85%? Can you explain that?

taxes are not medical expenses and therefore can't be used to increase the premium.

[berni_mccoy]

75. *crickets* guess not.

[Xithras]

81. Because it's an EXCISE tax.

It can be passed directly along to the subscriber and is NOT part of the premium. Open your phone bill. See those excise taxes? They're passed along whole cloth. That's what excise taxes ARE...taxes collected by the seller, but paid by the buyer. Just like sales taxes.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=7416798&mesg_id=7417760

[Cleita]

69. Smarter people than me have said it's going to affect those with good

union jobs, who get good insurance, or Cadillac plans. It's not going to affect rich people at all.

[berni_mccoy]

74. Did their case discuss the details of the bill? Plenty of smart people here post Breitbart links too

[depakid]

77. Many such people understand health policy and economics

and recognize that this- along with other incentives in the legislation will force more and more people )and more and more companies and union members) into high deductible, high copay junk insurance that many cannot afford to use- and that won't make a dent in medical bankruptcy rates.

This is what some are arguing for- suckers that they are.

Now, if they were only apt to hurt their own fool selves with their cheerleading- that would be one thing- but that's not the case. They're (knowingly or not) out to hurt others- and continue to drag the nations economy down in the process.

[berni_mccoy]

80. Who are "they"?

[uponit7771]

76. *****THANK YOU*****!!! Most who are complaining have even read the damn thing!!!

[Xithras]

82. And apparently most of its supporters haven't either.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=7416798&mesg_id=7417760

[senseandsensibility]

85. Thanks

The efforts to excuse and confuse are getting old.

[arcadian]

79. unrec

[IndianaGreen]

84. Faith-based defence of the Senate bill

It will be the working class paychecks that will get hit.

unrec

[ZombieHorde]

88. Thanks for posting, but there is a phrase I don't understand, what are "excessive benefits?" nt

[grahamhgreen]

89. The industry lawyers will run all over you. YOU WILL PAY. nt