Manchester government warned to plan for Cadillac tax on healthcare
The most immediate fiscal impact of the health care law is a $196,800 "transitional reinsurance fee" in 2014, the current fiscal year; it's not known what the charge will be in subsequent years. There will also be a $1 per-member charge that will total $3,120 in 2014 (and double this amount the next year). These costs were factored into the current year's budget, according to the report.
Under the "Cadillac tax," plans that have a value over $10,200 for single coverage and $27,500 for family, would be taxed at 40 percent of the dollar amount above those limits.
"These are costs that will have to be shared by the employee and employers," he told the committee. "I would think everyone would want to mitigate the impact of that cost, and you'll want to do that sooner than later."
The consultant was asked why the government would tax more generous health plans. "In my opinion it was to find dollars (for the program)," he said. "Under reconciliation, this had to be revenue-neutral; for every dollar spent there had to be revenue."