Health care benefits that we receive from our employer beginning next year must be reported on our W-2’s for 2010. The Patient Protection and Affordable Care Act (PPACA) adds this new reporting requirement.

Ostensibly, the reason for reporting this figure is in preparation for determining “Cadillac” status of plans for 2018. Wow! Eight years ahead of time, employers will be required to calculate the value of benefits. Does anyone really believe this? Five minutes after the figures are calculated on our W-2’s, we will most likely be taxed on these amounts.

Let’s look at what goes into the calculation at this point (the IRS has not issued final guidance on this reporting requirement yet). The TOTAL amount of the following benefits – this is the portion paid by the employees PLUS the portion paid by the employers of:

Medical plans
Prescription drug plans
Dental and vision plans (unless they are “stand alone” plans meaning an employee may elect only dental or vision and is not required to also enroll in medical coverage)
Executive physicals
Medicare supplemental policies
Employee assistance programs

Let’s look at two scenarios – a single employee and an employee with family coverage. These monthly amounts are calculated based on Ohio rates for a traditional PPO plan with office visit copayments, Rx copayments, $3000 deductible and 100% coinsurance.

Single – Male 35 years old:
$164.84 - Medical
$ 34.00 - Dental
$ 15.00 – Vision
$213.84 – Monthly Total

Family – Male 35 years old, spouse 35 years old, 2 children:
$688.35 – Medical
$ 98.00 – Dental
$ 45.00 – Vision
$831.35 – Monthly Total

If these benefits become taxable as regular income assuming a 20% income tax rate, the single employee in this example will bring home $42.77 less each month. The employee with family coverage will bring home $166.27 less each month.

These numbers are WAY TOO APPEALING to a government submerged in debt to pass up.

Patriotic Picture of Stella – 6 month Labradoodle
Photographer – Asa Durtsche