My friend April sent me an email about the Title IX: Revenue Provisions in the Health Care Bill that was passed. I was surprised at what she referred to so I went to the website, http://thomas.gov and searched for HR 3590 summary.
What I wanted was on pages 21-22 of the summary. I bet you’ll be as surprised as I was. Here is a summary of the summary.
Subtitle A: Revenue Offset Provisions – (Sec. 9001, as modified by section 10901) Amends the Internal Revenue Code to impose an excise tax of 40% of the excess benefit from certain high cost employer-sponsored health coverage. Any amount which exceeds payment of $8,500 for an employee self-only coverage plan and $23,000 for employees with other than self-only coverage (family plans) as an excess benefit. Increases such amounts for certain retirees and employees who are engaged in high-risk professions (e.g., law enforcement officers, emergency medical first responders, or longshore workers). Imposes a penalty on employers and coverage providers for failure to calculate the proper amount of an excess benefit.
As I understand this, if you are in a company plan and the company pays over $8,500 for a single individual employee that employee will be paying tax on the amount over $8,500 at 40%. Example: Company pays $10,000 for individual employee health coverage. Deduct $8,500 leaving $1,500 excess. Employee will have to pay $600 excise tax on the $1,500 calculated at 40%.
The employee that insures a family will have to pay the excise tax on the amount over $23,000 that the company pays. Example: Company pays $30,000 for a family plan. Deduct $23,000 leaving $7,000 excess. Employee will have to pay $2,800 excise tax on the $7,000 calculated at 40%.
(Sec.9002) Requires employers to include in the W-2 form the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employee’s gross income (excluding the value of contributions to flexible spending arrangements).
I don’t know if these plans apply to the average employee or to high earning executives. I guess we’ll find out when W-2s come out in 2011.
There are some other sections that relate to health savings account, Archer medical savings account, limits of annual salary reduction contributions under a cafeteria plan, etc.
