Does the Government Think You Have a Cadillac Insurance Plan?

October 15, 2009
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The Baucus health care bill version of Obamacare relies on several funding mechanisms.  One of those mechanisms is a tax on Cadillac insurance plan.  To many Americans, this means some plan that only rich fat cat CEOs or billionaires can have.  However, many Americans that have employer based health care are deemed Cadillac insurance plans by the Baucus health care bill.  This leaves many Americans asking, what is a cadillac insurance plan.

So how do you know if you are in a Cadillac insurance plan?

The Baucus health care bill defines a Cadillac plan as insurance coverage that costs $8,000 per year for individuals and $21,000 per year for family coverage.  You see the current details of the Baucus health care bill here, which will put you ahead of many of your representative in congress.

So how do you calculate the total cost of your insurance plan?

… many Americans will see the cost of their health insurance go up under the Baucus health care bill as they currently participate in Cadillac insurance plans.

Many employeer based plans have the employeer covering between 60 and 80 percent of the costs.  To calculate the costs, take your monthly cost for health, dental, and vision coverage, divide it by your percentage, and add your total monthly cost to that number.  You then have to multiply that by 12 to get the total yearly cost.

For example, if you pay $350 per month for health coverage and your employer covers 75%, take 350 and divide it by .25 which comes to $1,400.  This is what your employer pays per month.  Add your $350 to that which comes to $1,750.  Multiply that by 12 resulting in $21,000.  You also need to include participation in FSAs or HSAs when determining your total cost of the plan.

The end result is that many Americans will see the cost of their health insurance go up under the Baucus health care bill as they currently participate in Cadillac insurance plans.  This would seem to be counter to the goal of the bill to make health care insurance more affordable.

4/2010 Update:  The passed version of the bill after passage of the reconciliation bill was added defines a Cadillac plan as a plan that costs $10,200 for an individual or $27,500 for a family.  The tax becomes effective in 2018.

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3 Responses to Does the Government Think You Have a Cadillac Insurance Plan?

  1. [...] Do You Have a Cadillac Insurance Plan? [...]

  2. Dental Plan Provider on April 19, 2010 at 6:40 pm

    Good thing you’ve pointed this out. I’d assume a lot of Americans aren’t aware of this. I’d better check my insurance plan too. Thanks!

  3. [...] in this is that the AARP pushed for and endorsed the passage of Obamacare which included the Cadillac InsuranceTax that is pushing up AARP employee’s health care [...]

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