UPDATE: Sen Finance Panel Trims Tax On Pricey Insurance Plans
October 01 2009 - 5:18PM
Dow Jones News
The U.S. Senate Finance Committee further trimmed a proposed
excise tax on high-cost insurance plans Thursday by carving out
certain employer benefits that offer insurance for specific
diseases or costs associated with a hospital stay.
The change affects, among others, cancer-only plans and hospital
indemnity plans offered by insurers including Aflac Inc. (AFL),
Hartford Financial Services Group Inc. (HIG) and UnitedHealth Group
Inc. (UNH).
Those plans wouldn't be subject to an excise tax on so-called
Cadillac plans under an amendment to the proposal from Sen. Olympia
Snowe, R-Maine, that the committee adopted by voice vote.
Such plans offer a fixed cash payout to cover costs arising from
unforeseen medical events, including lost wages and transportation
to and from treatment.
To help cover the cost of the carve-out for indemnity plans,
senators dropped from the bill a tax benefit for employees who
purchase long-term care insurance under a so-called cafeteria plan.
Under these plans, employees are allowed to choose among a range of
tax-favored benefits to meet their individual needs.
Senate Finance Committee Chairman Max Baucus, D-Mont., said he
hopes to conclude committee work on amendments either late Thursday
night or Friday. The committee won't take a final vote on the
health legislation until next week, after the Congressional Budget
Office has provided preliminary cost estimates for the bill.
President Barack Obama worked the phones Thursday to help
engineer a successful vote on health-care legislation in the Senate
Finance Committee. He called Sens. Kent Conrad, D-N.D., and Robert
Menendez, D-N.J., to discuss the bill, according to Senate
aides.
Obama had called Sens. Ron Wyden, D-Ore., and Jay Rockefeller,
D-W.Va., on Wednesday.
The tax on Cadillac plans, which would be paid by insurers,
would apply to plans that exceed $8,000 for individuals, or $21,000
for families. A 40% excise tax would apply to premiums above those
amounts.
Senate Finance Committee members already agreed to changes to
the tax to lessen its impact on retirees and on workers in
high-risk professions such as firefighters and coal miners.
During debate Thursday morning, Democrats beat back broader
attempts by Republicans to strip tax increases out of the bill.
A defeated amendment from Sen. Mike Crapo, R-Idaho, would have
shielded families with income of less than $250,000 from direct
taxes in the bill, including the tax on Cadillac plans and a
penalty on individuals who fail to purchase health insurance. Crapo
said this would bring the health bill in line with Obama's pledge
not to raise taxes on middle-class families. The Crapo amendment
would reduce spending in other areas of the bill to offset the cost
of shielding people from the taxes.
"If we can't do health-care reform without taxing people in the
middle class and in the lower-income category, then we've got the
wrong plan in front of us," he said.
But Baucus said the Crapo amendment, in order to remain
deficit-neutral, would trim health-care subsidies from the bill for
those with modest incomes.
"In effect, this would be asking lower-income and middle-income
people to pay for this," Baucus said.
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244;
martin.vaughan@dowjones.com