Thursday, May 15, 2014

Over a barrel, ObamaTax-style

We've long noted that the ObamaTax will likely kill off group health insurance plans. It's finally dawning on the MSM, as well:

"The idea that employers might drop their health plans and replace them with a "defined contribution" for employees has been around for years ...  Some analysts anticipate a major shift to these plans in coming years"

Well d'unh.

The idea is that employers will drop expensive and unwieldy group plans and just shift those dollars to directly to their employees.

[ed: actually, this concept is neither new nor necessarily evil. Employers that subsidize employee premiums do so out of funds that would have otherwise been paid directly to the employee. The benefit is that these funds aren't taxable to said employee]

As one might imagine, the employees are going to be the ones most harmed by this:

■ As noted above, premium dollars going directly to insurance companies aren't taxable. Dollars going to employees are.

Under the new rules, employees can't use Health Reimbursement Arrangement dollars to pay premiums with pre-tax funds.

These "defined contributions" are, in fact, simply additional, taxable wages. How many workers will now see their tax bills take a big jump? 

And these "defined contributions" are going to bump a lot of employees out of contention for subsidies, increasing their out of pocket costs even more.

On the other hand, "increased tax liabilities" is just another way of saying "increased tax revenues," right?

[Hat Tip: Ace of Spades]
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