New Tax on Health Care
May 24 2010
New Email Regarding Health Care Changes
A new viral email has hit the streets that discusses new taxes on health care provided by private and public employers. While it is rooted in fact, the email leaves out an incredible number of pertinent items, most of all the fact that it won’t go into effect until 2018 and that the actual tax only applies to so called ‘Cadillac’ health insurance plans – those that cost more than $10,500 for individual plans and $27,500 for family coverage. And the tax would only be applicable to anything that exceeds the $27,500 threshold. It also contains a very clear misstatement that the cost of health care will be added to your gross income next year. A response from our Government Relations team follows the viral email.
The Email
You really need to read this……starts nextext year …This is part of the new Health Care Bill.
Contacted my Congressman about House bill HR3590 the health care bill just passed. I asked for a summary of changes.
The aid directed me to go to www.thomas.gov ; enter HR3590 in the search Box and look for summaries.
Starting in 2011 (next year folks) your W 2 tax form sent by your employer will be increased to show the value of what ever health insurance you are given by the company. It does not matter if that’s a private concern or governmental body of some sort. If you’re retired, so what; your gross will go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that you have never seen.
Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That’s what you’ll pay next year. For many it also puts you into a new higher bracket so it’s even worse.
This is how the government is going to buy insurance for 15 % that don’t have insurance and it’s only part of the tax increases.
Not believing this I researched the summaries and here’s what I’m reading:
On page 25 of 29:
TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002. “requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income.”
Joan Pryde is the senior tax editor for the Kiplinger letters. Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what I just told you about.
Why am I sending you this? The same reason I hope you forward this to every single person in your address book. People have the right to know the truth because an election is coming in November.
MOAA’s Response
This is a classic case of someone taking a fact and twisting it into something else.
Yes, the new law requires an entry on the W-2 showing the cost of employer-provided care.
But that doesn’t mean the employee will be taxed on it. the purpose of including it on the W-2 is mainly to show the employee what the value of the benefit is. As for the tax aspect:
First off, there isn’t any tax on health benefits value before 2018.
Second, there won’t be any taxes imposed on plans that aren’t deemed “Cadillac” plans (which are defined as those costing more than $10,200 for individual coverage or $27,500 for a family plan)
Third, it’s not the employees, but the insurance companies that provide those plans that will be taxed on part of such value – starting in 2018.
Fourth, the tax won’t be on the total value of the plan. Insurers will be assessed a tax equal to 40% of whatever share of the value exceeds the $27,500 threshold. i.e., if the value of a plan is $30,000, the insurer will be taxed 40% of $2,500 = $1,000.
Discussion
Posts are not held for moderation so your comment will appear immediately, but may be modified if it is deemed inappropriate.
[...] New Tax on Health Care | Battle of the Bilge [...]
[...] This post was mentioned on Twitter by John Christie, Matthew LoFiego. Matthew LoFiego said: New Tax on Health Care? Yes, but nowhere near how this email is presenting it. http://bit.ly/baFnUq via @AddToAny [...]
I read this e-mail and went to the Library of Congress synopis (Thomas) of HB 3590 to see for myself. It was all there. The w-2 form mandate and the excise tax (40% of anything over $8500 and $25,000 is the figure cited). The FY-11 starting date of the W-2 inclusion was there but nothing about taxes not having to ba paid, so I can understand why this e-mail came about. What the e-mail didn’t mention was the increase of the health care deductible from 7’5% to 10% this year (sec.9015) or the significant revision of the Fair Labor Standards Act of 1938 (Sec.1558) Is that also incorrect? Where is MOAA getting their info. Is the whole Library of Congress synopsis wrong and what in the world is a revision of the FLSA doing in a healthcare bill? PTG
The “insurer” should not be taxed on the amount, any more than the insured. This is simply another way for the GOVERNMENT to ensure that no PRIVATE insurance companies survive the Government takeover of free enterprise in this country. The whole taxation system is antiquated, and all the “reform” that an inept Congress can provide will do NOTHING to make it “right”. A user/consumer tax, with the ABOLITION of the IRS, is the only fair way to tax a country with the population the size of ours. We must take a long, hard look at the CONSTITUTION, and begin enforce laws that are already written, without Liberal/Progressive bias from power-drunk judges.
The entire bill/law that is erroneously called “health care reform” is UNConstidutional, no matter what the pundits tell you on the boob tube. The facts of the bill noted in the “viral e-mail” may have been tweaked, but I read a good deal of the “health care reform” (which is MORE than what MOST of those who voted FOR it did), and “tweaking” of the facts reported by the Liberal press AND CONGRESSIONAL SUPPORTERS of the convoluted pack of contradictions and legalese is ASTRONOMICAL in comparison!!! Very few individuals took the time to actually read the WHOLE thing, and those who did, had to wade through all the “stuck out this” and “inserted that”, along with all the lawyer language that is written in for their own job security! In plain English, our “official language”, the “health care reform” law is total BUNK!! Nowhere in the Constitution does it give the Government the authority to FORCE an American citizen to purchase any particular item…… whether the Government feels it’s in the person’s best interest or NOT!! It’s called “Freedom of Choice”, and THAT, is where my loyalties lie….. not to a bunch of political money-hounds who think that because they bought a President for four years, this country is going to lay down and take whatever they want to dish out.
I hope I haven’t embarrassed my sister with MY response, but I feel strongly that far too many people have given up far too much, in the interests of far too few!! It’s time to change THAT, and it should begin with throwing out this ridiculous piece of garbage legislation that passed IN SPITE of public MAJORITY OPPOSITION!!! Then, we go after Congress and give it that cleansing enema it so richly deserves, and get an AMERICAN back in Whitehouse. Give those Ameicans with enough sense to come as far as they have, the credit they deserve to choose for themselves WHAT they want to buy, WHEN they want to buy it, and TAX is when they do….. it just makes SENSE!!!
Major Goetz, we are looking into the figures and the additional points you brought up. It does look like the threshold of the ‘Cadillac’ plans are different than I stated in the article and I’ll get a correction up as soon as we have nailed that down, as well as the deductible change and the change to FLSA. As for the W2 listing, section 9002 (that is in the email) includes the following language:
(Sec. 9002) Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employee’s gross income
If the health coverage is not included in the gross income, it isn’t taxed.
Update
Our Government Relations team has confirmed the response with the Senate Finance Committee staff.
The only difference between the old system and this new law is that you now have to pay for the worst healthcare system in the entire world…whether you like it or not.
Peaking my curiosity, if there is no real use of the information, why are they demanding it be noted on the W2 form. My 36 years of exp with our federal govt sets of the BS alarm. If they did not plan to use the information for some future purpose, they would not demand that it be there. W2s are for tax purposes, thus it will in some way be related to taxes. Maybe not in the beginning, but in the future. It may also be a means to identify those that do not have insurance, or have insurance the the govt feels is inadequate, which may result in fines (taxes) or penalties (taxes).
The Socialist did not mandate the placement of this information on the W2 to simply keep the workers informed, that is not how they operate. Their motus operandi is to keep everyone in the dark, uninformed, unsatisfied, unsafe, angry and voting Democrat.
Why do you think they voted on this issue at night? Because sunlight is a disinfectant.
But, will child support be based on a gross income that includes the costs of employee paid health insurance. Also, can one then make the claim, that one lowered taxes, because if the gross income goes up by an amount untaxed; technically you lowered one’s % of gross that is taxed.