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Health Insurance Excise Tax Concerns

Health Insurance Excise Tax Concerns

Kent Conrad (D-ND), Senate Finance Committee member, raised health insurance excise tax concerns. On Monday, he described the idea of linking health insurance excise tax on those insurance plans, more known as “Cadillac” type, to medical inflation or to the general inflation is yet to be resolved. This issue remains one of the many unresolved issues regarding health reform being pondered over by the lawmakers. At the same time it is being apprehended by the employers that if the 35 percent, as it is being planned, excise tax on so called Cadillac insurance plan is to be indexed to the inflation, then a large portion of the employees will be adversely affected.

Amid these health insurance excise tax concerns, it is also coming out from some sources that it is being deemed as the only way to achieve the necessary revenue that the Senate Finance Committee is seeking to meet the expenditure for broader health reforms. Senator Jay Rockefeller (D-WV), Chairman of the Finance Health Subcommittee, said on Tuesday this new tax is supposed to bring in $200 billion over a period of 10 years. He says, although, in spite of understanding the lawmakers' strive to explore new option, he is against this idea stating this aggressive tax is likely to affect the workers in his state out of proportion.

According to Rockefeller, this tax is “not smart” or “a very dangerous idea”. He said that every single coal miner in his state is likely to be virtually burdened with a big tax. He says, the coal miners, as they do dangerous job, usually get good insurance benefit while this new tax proposal is going to affect the self-insured companies.

According to Baucus' proposal, the excise tax will be applied to insurance companies as well as administrator of any insurance plan above $21,000 for family and above $8000 for single, as well as to the plans which are self-insured or where group market is the clientele of the plans. At the same time, the plans, which target the individual market to be sold in, are exempted. The tax is to be levied on the sum of premium by which it exceeds the threshold which then would be determined for inflation.

According to Steve Wojcik, the Vice President of the Public Policy For The National Business Group On Health, as the tax is linked to the inflation and if the cost is not kept under control, it is very likely that a large number of people will be jumped to threshold amount. As the average cost for an employer runs in between $6000 to $7000, it is supposed to take a very small amount of time to be above this indexed threshold. According to his apprehension, as the TPA is going to be hit by the tax, it is very likely for them to charge the company more.

The same health insurance excise tax concerns are raised by Annie Hall, executive vice president for Communications Workers for America. She describes the tax plan as having very complicating features due to its many components to be looked on.

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