Monday, August 31, 2015

ObamaCare 'Cadillac Tax' Will Eliminate Millions Of Tax-Free HSAs & FSAs

by JASmius



Behold, the next - well, no, the next one will be the impact of the Employer Mandate after the 2016 election, so it's really the next after the next - ObamaCare Frankenstein's monster.

And don't you believe for an instant that this dawning fear is bipartisan, either:

The ObamaCare "Cadillac tax" won't take effect until 2018....

Unless Barack Obama decides to unilaterally move up the trigger date by Executive decree, of course.

....but lawmakers from both parties....

In a pig's eye.

....are concerned the assessment could endanger tax-free flexible health spending and are calling for it to be junked.

“It’s a death knell for them," Rich Stover, a healthcare actuary and principal at Buck Consultants, told Politico. "If the Cadillac tax doesn’t change, FSAs will go away very quickly.”

The reason why is sublimely simple.  Employers, particularly larger ones, get an open-ended tax break for providing health care benefits to their employees.  Flexible Spending Accounts and Health Savings Accounts expand that deduction by the amounts by which employers match their employees' contributions to them.  The "Cadillac tax," which - until The One waves his magic putter again and lowers the thresholds - will apply to benefits that are worth more than $10,200 for individuals and $27,500 for families, will, according to the Kaiser Family Foundation, hit more than half of ALL employers.

And the bitterest irony?  FSAs and HSAs actually do "bend the cost curve downward" by bypassing the third-party payment system of healthcare that has dominated this country since World War II and is the systemic reason for the upward spiral of healthcare costs and restoring direct patient-provider dealings on healthcare transactions, representing the only thing that can reverse the aforementioned upward cost spiral: the free market.  Is it any wonder that ObamaCare targets it?

Heck, the wonder is that it was deferred to 2018.

But we can count on the following Donk assurances being as transitory as the four winds:

The tax may be one of the first items to cross a new president's desk after he or she takes office in 2017, and already, Democrat presidential candidate Bernie Sanders has promised to kill the tax. Frontrunner Hillary Clinton has said she is open to changing it, telling the American Federation of Teachers she is worried "that it may create an incentive to substantially lower the value of the benefits package and shift more and more costs to consumers."

Translation: Sanders and Hillary know that ObamaCare is an at least big liability to their 2016 chances and are pandering to voters they need now that both will happily (heh) herd into universal Medicaid boxcars after either is safely elected.

Nevada Republican Senator Dean Heller, who is working on legislation on the the issue....

That will never survive the inevitable Democrat filibuster.

....said the the tax is one way ObamaCare continues to "overpromise and underdeliver."

At a robust overprice, he neglected to mention.

And, just to anecdotalize, the radiation treatments for my wife's basil-cell skin cancer with which she was diagnosed last summer were paid for out of her FSA.  And did I mention that she's the only employed member (following my involuntarily premature "retirement" two years ago) of a household that is already hemorrhaging cash to the tune of approximately twenty thousand dollars annually?  That Flex Spending Account sure was nice to have.  I can't wait to see how we're going to make ends not meet when it's gone.

But then who knows?  She might get laid off long before then and we can embark on a complete financial freefall at terminal velocity to splatter all over the economic rocks below.  Or maybe the Final Collapse will come even before that and we'll have plenty of company in our misery.  Something that I frankly expect sometime in the next 435 days.

As Plato once said in Beetle Bailey, "Things are never so bad that they can't still get worse."

Have a nice day!

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