‘Cadillac tax’ looms over health care coverage, could affect benefits like flex spending accounts [View all]

http://www.omaha.com/money/cadillac-tax-looms-over-health-care-coverage-could-affect-benefits/article_a84101e5-9345-5aa2-8c6c-6fc6e830f4ae.html

POSTED: THURSDAY, SEPTEMBER 3, 2015 1:00 AM

WASHINGTON (AP) — The last major piece of President Barack Obama’s health care law could raise costs for thrifty consumers as well as large corporations and union members when it takes effect in 2018.

The so-called Cadillac tax was meant to discourage extravagant coverage. Critics say it’s a tax on essentials, not luxuries. It’s getting attention now because employers plan ahead for major costs such as health care.

With time, an increasing number of companies will be exposed to the tax, according to a recent study. The risk is that middle-class workers could see their job-based benefits diminished.

First to go might be the flexible spending accounts offered by many companies. The accounts allow employees to set aside money tax-free for annual insurance deductibles and out-of-pocket health costs. That money comes out of employees’ paychecks, and they’re not able to use it for other expenses. Savvy consumers see it as a way to stretch their health care dollars.

FULL story at link.