The Affordable Care Act and Cadillac Tax

free essayThe Affordable Care Act has been amended by the Congress to impose an excise tax on high-end insurance coverage, sponsored by the employee. This provision is popularly known as the Cadillac tax and will become operative in January 2020. Currently, most of the employees that contribute to high-end plans are exempted from the income and payroll taxes. This means that the Cadillac tax is another approach to discouragement of the high-cost employer health plans. It is needless to say, that the Cadillac tax has created many opponents and arguments against its justification. In application, this tax includes 40 percent that is purposed to provide funding for the Affordable Care Act.

On the one hand, the Cadillac tax intends to slow the growth of the healthcare costs because it will eliminate disparities in the health coverage. It is also meant to generate revenues for the ACA spending (Miller, 2013). Practically, there is an unequal access to health coverage due to inequality in the monthly earnings. This means that highly paid employees will access better healthcare than those with the low income (Pipes, 2010). However, on the other hand, the high-end plans will increase the price of healthcare because both the employers and the employees will have higher rates. Similarly, the availability of quality care may be compromised due to the overuse of these services. In the emphasis, high-end health care plans tend to encourage the overuse of care like unnecessary tests and hospital visits (Potter, 2013). As a result, the overall costs of health care in the United States will increase significantly.

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On a further note, the current healthcare system in the United States is unfair. It provides better care to individuals who can afford paying higher amounts. Therefore, the Cadillac tax will significantly reduce the disparity between the low-end and high-end health plans through the taxation (Pipes, 2010). Secondly, because this tax will ensure, that individuals who can afford the best health care plans are taxed, the extra tax revenue will help to subsidize cost assistance for the low-income employees (Potter, 2013). However, the deductions may trigger some grievances from individuals with the high-end plans. Practically, the Cadillac tax has a direct effect on those with high-end plans through either costing more or charging them too highly (Surrey, 2013). In other words, this tax has hit all individuals with a high-end plan because it is non-deductible.

The biggest benefit offered by the Cadillac tax is lowering the overall costs of the health care. It provides insurance for millions of American citizens through ensuring a free access to preventive care (Marcovici, 2013). It requires the essential benefits that have to be covered under all insurance plans. These include treatment of illnesses such as mental conditions and long-term ones (Potter, 2013). In addition, this tax has extended to provide Medicaid program for adults, even if they do not have children. However, despite the benefits, when the Cadillac tax becomes operative, it means that the insurance companies will pay a 40 percent excise tax. These are plans with the annual premiums for individuals and families that meet the threshold of $10,200 and $27,500 respectively (Surrey, 2013). Moreover, a majority of employees covered by high-end plans, which are sponsored by the employees, mostly cover either old workers or those working in dangerous conditions. Therefore, in the relation to human resource professionalism, it means that the employers and companies will be required to pay bigger amount of premiums (Potter, 2013). In other words, when the Cadillac tax becomes operative, the employers and companies will be deducted higher amounts towards ensuring that the high-end insurance covers their employees.

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Furthermore, the individuals who are currently under a private insurance cover are disadvantaged. For instance, due to the failure to meet the essential health benefits, many insurance companies are forced to cancel covers for their clients (Surrey, 2013). Moreover, some plans include maternity fees that are not required by a significant number of American citizens. In addition, there is the likelihood that a significant number of employees will lose their insurance plans because some companies prefer to pay fines rather than purchase insurance covers for the employees (Marcovici, 2013). Besides, once an employee’s family is connected to his or her company, it can be very difficult to change an employer who may not provide coverage with access to same health care facilities. Therefore, this is a problem that can challenge the positive purposes and steps put forth according to Affordable Care Act.

In conclusion, the Cadillac tax intends to eliminate disparities in the health coverage and also to generate revenues for the ACA spending once it becomes operative in January 2020. For a long time, there have been disparities in terms of accessing the health care. In the emphasis, the highly paid employees will access better healthcare than those with low income. However, as a human resource professional, I do not support that the Cadillac tax under the Affordable Care Act. Firstly, it will raise the overall costs of health care in the United States. Secondly, it might create a tendency for the insured to overuse coverage through the unnecessary medical tests. Moreover, there are some companies that feel they will perform better when paying penalties rather than paying the deductibles. Under the private insurance cover, some plans are covered because they do not meet the requirements for essential health benefits.