"Cadillac" Health Care Plans and Obamacare

[DUNBAR]

Can anyone explain to me our future tax liability under the new health care law? I keep hearing talk of huge tax liabilities because "Cadillac" health care plans would be considered income. I imagine the health care we get as military personnel and retirees is considered pretty "Cadillac-esque." Are we exempt as military personnel? Does anyone on the planet understand this stuff?

And yes, I know Cadillac automobiles are junk. I didn't choose the expression.

[nsplayr]

2 second google search turns up that, no, military healthcare plans (including Tricare For Life) are exempt from the 40% marginal excise tax on "cadillac" health insurance plans schedule to take effect in 2018. Is that exemption sustainable forever as baby boomers start to stress the retired military health systems just like the systems for the nation as a whole? Who knows, but here's your answer as far as it's knowable today.

Fuller explanations of the purpose of the "cadillac" health insurance plan tax from NPR found here.

My summary of the theory: the purpose is to tax plans that encourage "excessive" healthcare consumption, forcing employers to subject them to normal market forces (i.e. taxation, competition, etc.). Right now all employer-based health insurance benefits are tax-deductible, creating an incentive for an employer to offer less monetary compensation in exchange for a more generous insurance plan (unions do this frequently). The effects of that are that the government collects less revenue than it would if you were paid, in regular salary vice in-kind benefits, the true total value of your compensation. More importantly, you as a consumer are likely to demand expensive and excessive health care because it's "free to you" essentially, so why not do those extra tests? That's the theory.

IMHO the tax as written in the ACA is not well-implemented because it creates a huge spike in marginal tax rate from 0% right up to 40% on the next dollar rather than being progressive, and I also was never a huge believer in the idea that excessive health care consumption (and incentives that lead to excessive consumption/use built into the tax code) are the biggest drivers in healthcare costs. The Japanese "consume" much more healthcare per capita (even adjusting for variances in the age of the population) than Americans yet pay lower costs because their system is unified and addresses costs more effectively than ours. If we had a better system, we wouldn't need to worry about working to "limit 'excessive' healthcare consumption;" you as a person could seek all the medicare care you felt was necessary or desirable without the ballooning costs we see in our current employer-based insurance system.

Edited October 14, 2013 by nsplayr

[TreeA10]

I am not an expert and did not stay at a Holiday Inn Express last night. A detail I've heard regarding this catastrophe of a plan is Caddilac plans are defined as health care plans with a total value over $10K for singles or $27K for families and the compaines providing those plans will have to pay a 40% tax on those plans starting in 2017/18-ish. I'm guessing this is going to generate a whole lot more WTF?? moments as companies drop plans and opt to pay the fine/tax/alms/penance to the Government.

[matmacwc]

Well then they will all be Cadillac by 2017. My parents plan went from 4k a year to 14k and their deductible went up 1500. I guess this crap is getting more affordable.

Excessive health care consumption? YGBSM.

[HeloDude]

Well then they will all be Cadillac by 2017. My parents plan went from 4k a year to 14k and their deductible went up 1500. I guess this crap is getting more affordable.

I just spoke to my sister this weekend and she said they are being told that their premiums (their health insurance from her husband's job) are going up around 55-60%.

What ever happened to people saving $2500/year?

David Ramsey explains it pretty well here:

[TreeA10]

I am sure this chart explains where to find the answer. Seriously, what could possibly go wrong?

https://www.jec.senate.gov/republicans/public/index.cfm?a=Files.Serve&File_id=8e6dbf03-ca4a-44be-9de4-a100c43fb5c8

[Mark1]

Excessive health care consumption? YGBSM.

Really? You've GBSM.

Part of the reason healthcare is so god damned expensive in this country is precisely because of excessive consumption...and I'm tired of subsidizing a general public that can't deal with routine illnesses without 'medical care'. Is it really necessary to see a doctor so that they can tell you to get some rest and drink a lot of fluids?

Infant child has a fever? Emergency room visit.

You're a healthy 24yr old who doesn't feel so good because you have the common cold? Go to the doctor and demand antibiotics. Oh, antibiotics aren't effective with a viral infection? I don't care, I've heard good things and I want them...write the prescription.

Getting a wisdom tooth pulled? I need to be unconscious for that, and I want a Vicodin prescription to kill the 'pain' afterwards too, because I can't deal with some minor discomfort unless I'm heavily medicated.

I've got some lower back pain because I have horrible posture and sit in front of a computer all day. I need an MRI. MRI shows nothing abnormal? Thats odd. Well I guess you should just write me a prescription for a bunch of painkillers then.

Rolled my ankle playing basketball and it's mildly painful. Need an D.O. to look at it, get x-rays, give me a pain killer prescription and an air cast to immobilize it. Oh yeah, I need time off of work so that it can heal, too.

Yeah. You've got the be shitting me. I'm tired of subsidizing a general public that can't deal with being a human being.

[TreeA10]

Hey, here is some good news, pages of regulation regarding governing the healthcare of Americans has topped 11.5 MILLION pages. Healthcare for all will certainly be better now.

https://www.cnsnews.com/news/article/penny-starr/11588500-words-obamacare-regs-30x-long-law

[Steve Holt!]

But it really hurt when they cut all those teeth out of my facehole..

[matmacwc]

Really? You've GBSM.

Part of the reason healthcare is so god damned expensive in this country is precisely because of excessive consumption...and I'm tired of subsidizing a general public that can't deal with routine illnesses without 'medical care'. Is it really necessary to see a doctor so that they can tell you to get some rest and drink a lot of fluids?

Infant child has a fever? Emergency room visit.

You're a healthy 24yr old who doesn't feel so good because you have the common cold? Go to the doctor and demand antibiotics. Oh, antibiotics aren't effective with a viral infection? I don't care, I've heard good things and I want them...write the prescription.

Getting a wisdom tooth pulled? I need to be unconscious for that, and I want a Vicodin prescription to kill the 'pain' afterwards too, because I can't deal with some minor discomfort unless I'm heavily medicated.

I've got some lower back pain because I have horrible posture and sit in front of a computer all day. I need an MRI. MRI shows nothing abnormal? Thats odd. Well I guess you should just write me a prescription for a bunch of painkillers then.

Rolled my ankle playing basketball and it's mildly painful. Need an D.O. to look at it, get x-rays, give me a pain killer prescription and an air cast to immobilize it. Oh yeah, I need time off of work so that it can heal, too.

Yeah. You've got the be shitting me. I'm tired of subsidizing a general public that can't deal with being a human being.

Hold on now, I agree with you!

I was thinking of the ordinary folks who get blamed and/or charged for it. I've seen enough illegals in the E-room in Del Rio to know crap is out of control.

And for those of you that give the MSNBC talking point, "we are already paying for it." Re-read , my post above. If we already pay for it, why are folks health care going up 300%? As Ramsey says, simple math. Affordable Care Act my ass.

Edited October 17, 2013 by matmacwc

[nsplayr]

As Ramsey says, simple math. Affordable Care Act my ass.

::opens can of worms::

I haven't watched the Ramsey video on the ACA, however anyone who thinks Ramsey is a wizard when it comes to simple math is seriously fooling themselves. His advice on the kind of returns you can expect on retirement savings and his logic behind why you shouldn't use credit cards is enough to convince me his grasp of basic economics math is not the greatest. Totally off-topic and ready for incoming spears from Ramsey-lovers but it had to be said.

Edited October 17, 2013 by nsplayr

[HeloDude]

::opens can of worms::

I haven't watched the Ramsey video on the ACA, however anyone who thinks Ramsey is a wizard when it comes to simple math is seriously fooling themselves. His advice on the kind of returns you can expect on retirement savings and his logic behind why you shouldn't use credit cards is enough to convince me his grasp of basic economics math is not the greatest. Totally off-topic and ready for incoming spears from Ramsey-lovers but it had to be said.

I'm still wanting to know when my sister's health insurance premiums will go down $2500/year? And if it won't, then why not? I'll wait for an answer.

[matmacwc]

::opens can of worms::

I haven't watched the Ramsey video on the ACA, however anyone who thinks Ramsey is a wizard when it comes to simple math is seriously fooling themselves. His advice on the kind of returns you can expect on retirement savings and his logic behind why you shouldn't use credit cards is enough to convince me his grasp of basic economics math is not the greatest. Totally off-topic and ready for incoming spears from Ramsey-lovers but it had to be said.

Watch it.

17% growth this year on my IRA, 10% on TSP due to his advice.

Simple math on OCare, it is terrible, it will fail.

[Fuzz]

If you go through his curriculum, you will understand his advice on credit cards (while he applies it across the board) are for people who can't control themselves with spending or are severely in debt. Can't really spend money when you don't have anything in your bank account vs buying it on credit.

I disagree with him on many things but I know literally dozens of families that have followed his finance curriculum and are now debt free years earlier than they normally would. His systems work, they are logically sound and don't rely on credit, which is why I think a lot of other finance people hate him. In today's world your ever precious credit score seems to be the corner stone of people's finances, but when you have no debt or buy your car upfront with cash it doesn't really fit in today's system that relies heavily on credit.

I'm still wanting to know when my sister's health insurance premiums will go down $2500/year? And if it won't, then why not? I'll wait for an answer.

^ this, I know literally not a single person who's premiums that went down, my parents monthly premium doubled.

[Danny Noonin]

Watch it.

17% growth this year on my IRA, 10% on TSP due to his advice.

Simple math on OCare, it is terrible, it will fail.

So you're only lagging an s&p 500 index fund by 5% and 12% respectively and paying extra for that honor? Haven't we talked about this before?

Edited October 17, 2013 by Danny Noonin

[matmacwc]

Yes.....

[Smitty3187]

Hey, here is some good news, pages of regulation regarding governing the healthcare of Americans has topped 11.5 MILLION pages. Healthcare for all will certainly be better now.

https://www.cnsnews.c...gs-30x-long-law

Let's not get too carried away... the article says 11.5 million words ... only about 10,000 pages for your reading pleasure.

Watch it.

17% growth this year on my IRA, 10% on TSP due to his advice.

Simple math on OCare, it is terrible, it will fail.

29% growth on TSP without his advice...

[Butters]

Let's not get too carried away... the article says 11.5 million words ... only about 10,000 pages for your reading pleasure.

29% growth on TSP without his advice...

I got 29.5%

[DFRESH]

I got 29.5%

Teach me?

[ThreeHoler]

Teach me?

Put it all on red.

[DFRESH]

Put it all on red.

Worked last time. Probably won't next time.

[Butters]

Worked last time. Probably won't next time.

Probably! Actually, Red is a 50% return, but cheap Indian Casinos charge fees.

[Vertigo]

Out of curiosity- those that are saying thier monthly premiums have jumped up a large number, is that before or after factoring in the government subsidy based on income level?

[ThreeHoler]

Probably! Actually, Red is a 50% return, but cheap Indian Casinos charge fees.

47.37% for American...48.65% for French...

[HeloDude]

Out of curiosity- those that are saying thier monthly premiums have jumped up a large number, is that before or after factoring in the government subsidy based on income level?

My sister and her husband will not receive any subsidies to offset their large premium increase because they don't qualify as low-income earners. Again, still waiting for someone to tell me when her family will see a $2500 decrease in their insurance costs...