Does the Government Think You Have a Cadillac Insurance Plan?

The details of the Senate version of health care reform are murky at best. Now that they have cut off debate in a 1:00 am vote, the details should start to trickle out to the American people. One way that the Senate bill is financed is through the taxing of so-called Cadillac insurance plans. The exact details are unknown, but the Baucus version of the bill has been out for awhile.

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. The current bill in the Senate ups this to $23,000.

So how do you calculate the total cost of your insurance plan? Many employer based plans have the employer 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.