The IRS is requesting comments on a notice it issued on potential approaches to issues relating to the highly controversial ObamaCare Health Insurance Tax (HIT), of which most Americans with health insurance policies may not be aware, but which will cost them. The Health Insurance Tax, also known as the Cadillac Tax, is a 40-percent excise tax outlined in a section of the Affordable Care Act that targets overly generous employer-provided healthcare plans, placing pressure on employers to offer less-generous health plans. The tax marks the first-ever tax on healthcare benefits and is expected to cost individuals more than $500 in extra premiums, and families more than $700 this year.
According to Politico, the tax will hit insurance and related perks valued at more than $10,200 for singles and $27,500 for families. If an individual’s benefits are worth $15,000 for example, the tax would apply to the $4,800 above the threshold. In other words, employers are being discouraged from offering generous health plans.
The Daily Caller reports, “The tax was buried by congressional authors in section 9010 of the law and was envisioned as a way to raise future funds to pay for Obamacare.” The fee, according to the Congressional Budget Office (CBO) is a “statutorily fixed” amount, rather than a percentage rate, that must be collected each year.
The ObamaCare fees were structured in such a way as to be delayed so that they would kick in starting in 2014 at $8 billion and continue to grow to $14.3 billion annual price tag on insurance policies by 2018.
Over the next decade, consumers will pay more than $145 billion for the tax, according to the CBO, which adds that the levy will continue to increase each and every year into the future. As noted by Politico, however, companies are already feeling the effects now as they plan employee benefits. Politico reports that some companies are evening negotiating with unions over benefits “that could spill into 2018.”