First it was health care reform and upcoming is the budget battle. What you may have thought secure (sort of) is in for a bumpy ride in the years ahead. If you are one of the hundred twenty million or so Americans with employer sponsored health benefits, what you may have thought you had is slipping away.
This will have serious implications on your total compensation, your plans to retire, your net income if already retired and on collective bargaining.
PPACA does a number of things affecting employer based health benefits:
- Benefit mandates add direct costs and increased administrative costs.
- Contributions to flexible spending accounts are limited.
- A change in taxation of the prescription incentive payment for retirees is causing employers to cut back on these benefits.
- W-2 reporting of the value of health benefits draws attention to the lost revenue resulting from these benefits.
- A 40 percent excise tax on high cost (“Cadillac”) insurance plans in excess of $27,500 (family coverage) and $10,200 (individual coverage) offers the prospect of taxing these benefits or forcing benefit reductions.
And now, as a result of heightened attention to the budget and deficit there is renewed interest in taxing the value of health benefits. Some policy experts see this as a dual benefit. It creates increased revenue for the government and on the theory that if you pay more for health care you will be a wiser consumer, it reduces health care costs. You may see things differently.
Health benefits are a big budget target on many levels from Medicare to your benefits at work. It is not clear what the final impact of current discussions will be. However, higher out-of-pocket costs and more coming out of your paycheck are very high on the list of possibilities.
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