30 Sep 09 Tax on ‘High End Health Insurance’ Could Also Affect Mid-Range Policies

A new idea for a tax increase on the more expensive insurance policies for the wealthy has been proposed by US Senator Max Baucus, a Democrat from Montana. Baucus wants the excise tax to raise available funds for the proposed health care reform package and has stated that it needs to target the most expensive policies such as those offered to partners at Goldman Sachs and those held by other high earning professionals.

If passed, the tax would be able to raise over 25 percent of total $774 billion required to pay for the plan Baucus envisions. At the same time, the excise tax would help discourage the too luxurious coverage that certain experts say has fueled the nation’s high risk over spending on health care. Under this plan, insurance companies that sell plans which cost more than $8,000 per individual or $21,000 for a family would end up needing to pay 35 percent in excise tax for the amounts that exceed this guideline.

This means that many of the policies taken out to cover fire fighters, coal miners and veteran employees at small businesses would easily exceed these standards and thus the cost of those individual’s and their family’s health care would be expected to rise so that the insurance company can cover the tax.