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Democrats Want To Take Away A Popular Health Plan From You

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Obamacare taxes on HSA plans

ObamaCare’s ‘Cadillac Tax’ Could Kill Popular HSA Plans

BY JOHN MERLINE – Investor’s Business Daily

HSA plans combine a high deductible health plan with a tax-exempt savings account, into which individuals and employers can contribute money each year. Any interest earned in the HSA belongs to the individual, any money spent out of the account on health care isn’t taxed at all, and any funds left at the end of the year roll over to the next.

The idea is to encourage consumers to be more frugal in their use of health care by making them more directly aware of costs and rewarding them for being prudent shoppers.

The popularity of HSA plans is undeniable. Congress authorized these accounts in 2005, and by the end of last year 17 million people had enrolled in one, amassing $24.2 billion in assets, according to a new report from the Employee Benefits Research Institute . Half of companies with 500 or more workers offer an HSA plan today, and two thirds say they’re very likely to do so by 2017.

Their success is undeniable as well. The federal government’s own national health care spending report credits the rise of these “consumer directed health plans” for contributing to the slowdown in health spending growth over the past several years.

So why will ObamaCare’s Cadillac Tax bring this HSA train to a screeching halt?

It imposes a 40% excise tax on employer-provided health insurance premiums above a certain threshold in the law — starting at roughly $10,200 for an individual plan.

While the tax was sold as way to discourage gold-plated plans — thus the name — it will hit 48% of employers when it goes into effect in 2018. And just five years after that, 82% will be affected.

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