Where’s My “Cadillac” Health Plan?

I recently read over the 2012 audit report for a town in New Jersey where I own some property.

It was interesting to note that the actuarial firm calculating their OPEBs (other post employment benefits – liability) notes that health benefits granted by union contract to the town’s employees and retirees will exceed the “Cadillac” plan threshold in Obamacare resulting in an excise tax that will need to be paid. Under Obamacare this tax is to be paid by the insurer, in this case the township (a.k.a., the taxpayers) on behalf of the insured retirees.

The actuarial firm assumes the township will not only pay the excise tax but will also gross it up for income tax purposes and make an additional payment to the insured retirees as the excise tax paid by the township will be imputed income to the insured retirees. This is of course insane but will be a big issue coming before state and local government as Obamacare becomes reality. (The town in question has yet to formalize a policy on the “Cadillac” excise tax or gross up.)

Will the public employee unions throughout the US insist that taxpayers pony up to pay the excise tax on their “Cadillac” health plans and gross it up, or ask Mr, Obama for a waiver? (Here’s a clue – neither course of action will prove politically acceptable.)

Do you know people in the private sector who have “Cadillac” health care plans and who will have their employer reimburse them for any excise tax due under Obamacare or additionally pay for the tax gross up of excise tax reimbursements?

As the realities of Obamacare become real the need to repeal the law will become clear even to public employee unions.

Regards, Pete Weldon

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