Healthcare Reform and You

July 11, 2012: Now that the controversial Affordable Care Act has been upheld by the Supreme Court, many Teamster members are asking how the law will affect their benefits.

What happens to my benefits? Will they be taxed?  Will my taxes go up?

In this Q&A, TDU provides just the facts and the answers to common questions about what the new law will mean for your health benefits.

Question: How will the Affordable Care Act affect my benefits?  

Answer: Some changes mandated by the law have already taken effect. The biggest change is in dependent coverage.

Previously, under most health plans a dependent child lost coverage at age 19 unless he or she was enrolled in college. Under the Affordable Care Act, your children are covered by your health plan up to age 26. This even includes married children (but not their spouse).  

Q: What other benefit changes can I expect to see?

A: Beginning in 2014, no plan can exclude anyone for a pre-existing condition.  

The new law will also eliminate annual and lifetime caps on your medical benefits.  

Many plans contain a lifetime maximum of $1 million. With today’s hospital costs, seriously ill members can burn through that much in claims. The Act will prohibit plans from imposing annual or lifetime caps on hospital or prescription drug coverage.  

Changes in caps will be phased in between now and 2014. Check with your plan for details.

Q: Will my Teamster health benefits be taxed?

A: The short answer is No. But there’s been so much talk about the tax on “Cadillac” health plans, that it is worth going into the details.

First of all, the law will never tax an individual’s health benefits. The tax, which takes affect in 2018, applies to the Health Plan, not the individual.  

Second, no Teamster benefit comes close to the threshold of a High-Value health (or “Cadillac”) plan which is coverage that costs $27,500 a year.  

The top Teamster health plans under national contracts like UPS, freight and carhaul cost around $15,000 a year—including dental and vision. The minimum threshold for the High Value tax is a benefit that costs $27,500 a year—not counting dental and vision coverage! (Now, that’s a Cadillac!)  

The tax threshold will top $30,000 by 2020.  

Teamster members are right to be on the alert for attacks on our benefits—especially if healthcare costs continue to rise. But the so-called “Cadillac” tax is not going to affect any Teamster plan for the foreseeable future.

Q: Starting in 2014, millions of previously uninsured people will get health coverage. How will this be paid for? Will my taxes go up as part of Healthcare Reform?

A:  By 2014, any adult who does not have health insurance—through their employer or otherwise—will be required to pay a penalty with their federal income tax.  

Teamsters and other working people who have healthcare coverage will not have any tax increases under the new law. But some employers, insurance companies and high-income people will.

The Affordable Care Act includes taxes on drug companies, insurance companies, and employers who do not provide healthcare coverage. Individuals who make more than $250,000 a year will also pay higher Medicare taxes than they currently do.

These taxes on corporations and high-income individuals account for 87 percent of the tax increases under Healthcare Reform.  

The tax penalty paid by individuals who do not comply with the individual mandate to buy health insurance will account for 4 percent of the new tax revenue under the law.

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