Three Obamacare Taxes (and The Paperwork) No One Is Talking About

Public Employers Seek to Soften Impact of Obamacare Fees and Taxes

These three are: a tax to fund the Patient-Centered Outcomes Research Institute (PCORI); the transitional reinsurance fee; and a tax on insurance companies based on premiums and market share. Today, Ill fill you in on the PCORI fee. It was put in place to finance the Patient-Centered Outcomes Research Institute (PCORI), which will conduct research on comparative effectiveness of treatments. The tax went into effect for 2013 and the first payment was due on July 31. Who pays the tax? Insurers and sponsors of self- funded health plans are responsible for reporting and paying the PCORI fee to the IRS. PCORI fees apply to all group health insurance plans regardless of whether they are sponsored by small or large employers and regardless of whether the risks are self-funded (meaning while an insurance company administers the plan, the employer, typically a larger one, is on the hook for the medical bills) or fully insured. In the case of fully insured plans, the insurance carrier is responsible for paying the fee. The tax is basically a head tax a set dollar fee for every person covered by the medical plan. Those responsible for the tax must file a Form 720 ; happily, there are instructions as well as 16 pages of guidance and regulations and finally, a most helpful IRS webpage devoted to this tax. Wow. So forms, instructions, regs the whole circus coming to town. How much is this tax? $1 per person per year. Talk about hunting rabbits with an elephant gun 16 pages of the federal register explanations and regulations for a $1 per person head tax? Yep.
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In 2018, the threshold for single coverage is $10,200 and $27,500 for family coverage (with a higher threshold for retirees and those in high-risk professions like law enforcement). Only the portion of the premium that exceeds the threshold will be subject to the tax. For example, if a single person has an $11,200 premium, only $1,000 will be taxed at 40 percent. The Cadillac tax is intended to both rein in the cost of health care and encourage employers to favor wages over benefits when compensating their workers. Some, however, say the Cadillac tax is an indication that public employees are receiving lavish benefits at the taxpayers expense. Regardless of the reason, theres near certainty that both the tax and the fee will impact municipal coffers and individual employees.
For the original version including any supplementary images or video, visit

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