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Cadillac Health Insurance

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Definition: A Cadillac health insurance plan is a high dollar health insurance plan (estimated currently as more than $8,500 per year) that provides extra coverages and low out-of-pocket costs. For example, someone with a Cadillac health insurance plan has a co-pay of only $10 where the average person's co-pay may be $20-30. Also a Cadillac health insurance plan has additional coverages that average health insurance plans don't have such as coverage for marriage counseling, acupuncture and in vitro fertilization.

Cadillac health insurance plans have always been a target for criticism because some feel they provide unnecessary waste. Recently Cadillac health insurance plans have been discussed even more because of the health insurance reform legislation. The Senate has proposed a tax on Cadillac health insurance plans. The tax would be imposed on the companies and not the individuals.

The Senate feels this Cadillac tax proposal will lower health care costs overall by shifting companies away from providing Cadillac health care plans. The companies will then provide better wages instead of a Cadillac health insurance plan.

On the other hand, the House of Representatives feel differently and oppose a Cadillac tax proposal. They feel instead it is best to tax wealthier Americans to help pay for the cost of health care reform. The House feels that by taxing Cadillac health insurance plans the cost would trickle down to the consumer and they would end up paying more in premiums. Also, a majority of Americans that have Cadillac health insurance plans are union members such as teachers, firefighters and police officers. These Cadillac health insurance plans are part of a benefit plan to provide these servants of our community a decent salary package since their compensation is not comparable to the services they provide to the community.

Also Known As: Cadillac Tax Proposal
Examples:
Linda is an elementary school teacher. Although she only makes $35,000 per year she has amazing health insurance. She recently had to go to the emergency room and only had a $50 co-pay.

If her Cadillac health plan is taxed Linda will not make any additional money in her salary but will probably pay more out-of-pocket for her health insurance premiums or will have additional out-of-pocket costs she did not have before. This may cause Linda to reconsider seeing the doctor as much and therefore raise healthcare costs overall because of the lack of preventative care.

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