The Excise Tax Myth

[berni_mccoy]

Many people, bloggers and even op-ed writers are saying the tax on the "cadillac" plans are going to hit the middle class unnecessarily hard. However, if you read the bill text on this item, it's the Health Insurance companies who are going to pay the tax, not the employer, not the employee. According to 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, if it's a typical plan, it's the Health Insurance company who pays the excise tax on the excess benefit, not the employee or the employer. If the employer makes HSA contributions and the plan is an excess benefits plan, then the employer pays the tax on the excess contributions.

The employee will not be paying this tax.

Given the fact that the health insurance companies will be subject to the 85/80 MLR, they won't be passing this added expense onto the subscriber.

[grantcart]

1. and there are alternatives to it as this progressive economist notes

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=433&topic_id=100575&mesg_id=101221

[Undercurrent]

2. Thank you, berni.

Earlier I was trying to follow along with Bob Herbert's confusing op ed. It was confusing to me anyway, as his assessment seemed to come out of left field, and it didn't comport with what I thought I already understood. I was so confused I posted a request for help in trying to figure out his op ed.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=388x9575

Herbert's op ed:
http://www.nytimes.com/2009/12/29/opinion/29herbert.html

Anyway, it looks like Herbert, and a lot of other folks, as you point out, are confused.

[FrenchieCat]

3. I'm going to write to him and tell him that he confused me.

and that I had to get someone else to explain it to me,
and that this is too important just be writing stuff,
especially if you are criticizing, if you don't know what
you are talking about.

He should know better.

[Undercurrent]

4. I'm so glad I'm not alone!

Not so glad that Herbert is posting in a confused state of mind. There are a LOT of people popping off about various parts of the health care bill(s) before they have all the facts, or understand what they've read.

Thank you as well grancart. Saw your post in my "help" thread. I knew I could post my questions on this forum, and get all sorts of helpful feedback.

[Cha]

9. Thanks for writing him..

[Cary]

5. Thanks Berni

Yet another reason why we should wait and see the real bill and think it through before we go apes*** over what's in or not in it. Then we need to get to work to make it better.

[firedupdem]

6. Thanks for breaking this all down. n/t

[berni_mccoy]

7. A similar post on this is up on my Journal now.

[Cha]

8. Thanks bernie, for

posting this here. Why is this so confusing that even Bob Herbert would get it wrong?

And, thanks for studyimg on this and working for clarification!

[Born_A_Truman]

10. Maybe they are talking about (B)

‘‘(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.

[berni_mccoy]

11. Still isn't the employee paying the tax. And these are EXCESS HSA contributions

not the norm and not likely something a union worker has.

HSA's that exceed the limit are likely tax write-offs for businesses, not actually used as intended. It's a loophole in the current tax law.

[Cha]

12. Kick to the TOP.

[grantcart]

13. interesting

[johnaries]

14. Another error in their logic is that they are basing the impact

on the middle class on rates continuing to rise at the same or similar increase. However, the whole purpose of the HCR is to get those rates under control.

[Cha]

15. Kick to stay visible.

[quiet.american]

16. So set me straight, because I've got someone yelling at me about it right now.

In another thread, this poster is going nuts over the fact that they feel this tax will throw a seemingly crushing weight onto unions.

But, is that not the case?

[LiberalAndProud]

17. The AFL-CIO seems to think so.

I read that Pelosi is trying to kill it in reconciliation. I will be surprised if it makes the final cut. It will be a relief to have a final bill so we can talk about what is actually in the final version.

The excise tax is not one of my favorite aspects of this bill. I'm hoping it gets killed in reconciliation.

[quiet.american]

18. Ah, thanks. I agree. nt