A 2018 Train Wreck Coming?

2018 Train Wreck

2018 Train WreckI think we have a train wreck coming.

As you may know, in 2018 the health care Cadillac Tax will be implemented. The Cadillac Tax is the 40% tax an employer will be forced to pay on any health coverage plan costing over $10,200 for an individual and $27,500 for a family.

Now, some will argue only a few plans will be targeted. They say only the ridiculous, gold-plated plans of the fabulously wealthy will get hit. But I wonder about that.

Consider this: many smaller employers use health care plans that are age rated. The older you get, the more you pay.

That’s the boat I’m in, along with many thousands of others across the country. These aren’t exactly “Cadillac” plans, just basic plans that hit you with increased premiums because you had the bad luck to get older.

Looking ahead, and figuring what the health care plan would be for me at age 50 and above (ouch!), I’m seeing a projected cost of $22,438.00

Subtracting $10,200 from that amount leaves $12,238.00, which is subject to the draconian 40% tax. Therefore, my employer will be forced to kick in $4,895 in extra taxes to the guv-ment.

The thing is, it doesn’t matter what percentage I pay of the total cost or what percentage the employer pays. What matters is only the total cost of the plan. The tax gets paid by the employer.

I have to wonder about the financial burden this places on small employers, and whether they’ll want to bear it.

I doubt it. I think many employers will be forced to huddle up the accountants and start crunching the numbers. Maybe canceling the health care plans for the employees and forcing them to the government exchanges might be a better option, even if they have to pay a penalty tax for doing so. Or maybe offsetting the tax by contributing less and less to the plan. Sort of: Dear employee, you pay all the premium, we’ll pay all the tax.

Who knows? Of course, the health care law has some pretty significant hurdles to pass right now, and there’s a chance the whole thing might be scrapped anyway. We’ll see what the Supreme Court says.

But as we go forward, each year brings forth new mandates and more questions about if this health care reform program was really what it was promised to be.

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