Ilovebenefits’s Blog

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Here is What We Know About the Excise Tax so Far

Isn’t it amazing how difficult it is to determine what is in the Healthcare bill…so much for transparency.

Summary of Improvements to the Excise Tax

Delays Effect of Tax Until 2018: Provides a five-year transition window for all plans negotiated through collective bargaining and for state and local employee plans before they are potentially subject to the tax.  This is what is typically done under federal laws to allow parties to collective bargaining agreements time to renegotiate the plans.
2) Raises Thresholds for Active Workers: Raises the threshold at which family plans are taxed from $23,000 to $24,000 in 2013 for all working families and from $8,500 to $8,900 for singles. Annual increases are tied to the Consumer Price Index plus one percentage point.
3) Increases Thresholds for Excessive Inflation: Raises the thresholds higher if health care costs grow faster than expected from 2010-2013.
4) Exempts Dental and Vision Plans from Threshold Calculations: This will begin in 2015, which could raise the thresholds as much as $2,000 for families.
5) Adds Demographic Factors to Determine Plan Thresholds: Thresholds for plans that have significant numbers of older workers and female workers will be modified to reflect the higher plan costs for those workers. The Secretary of HHS will establish an actuarially-based formula based on national averages. These factors could significantly raise the thresholds.
6) Maintains Protections for Pre-Medicare Retirees and for High-risk Workers: Preserves the original Senate proposal that would raise the thresholds for plans covering pre-Medicare retirees and for plans that include workers in high-risk professions (affecting more than 9 million workers). This protection includes workers “employed to repair or install electrical or telecommunications lines.” The thresholds are $26,000/family and $9,850/single.
7) Blending of Pre-Medicare and Medicare Premiums is Maintained: This averaging significantly reduces the affect of the tax on plans.
8) Maintains Thresholds for High-cost States: Preserves the original Senate proposal that would raise the threshold for high-cost states, affecting more than 38 million workers.  Thresholds are 120% for 2013, 110% for 2014 and 105% for 2015.
9) Health Plans Get Access to the Insurance Exchange: Allows any collective bargaining unit into the health insurance exchange in 2017, subject to collective bargaining. Under the House and Senate bills the ability to join is currently discretionary by the exchange (Senate) or by the Secretary of HHS (House).
10) Significantly Reduces Taxes on the Middle Class: These changes are estimated to reduce the amount of revenue raised by $60 billion – decreasing the hit from the excise tax to $90 billion, from the original $150 billion over 10 years.


January 16, 2010 - Posted by | Federal Government, healthcare | , , , ,

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