You got us this time with the health insurance. As your advisor said (paraphrased) – Americans are so dumb that they won’t realize what we did until it is too late. Yes, it is too late. The changes in health care are so deep that I doubt anyone can turn it back. You took a problem that some people had and now dumped a giant problem on who else but the middle class again. You see, the rich won’t be haunted by this. The poor may or may not be helped. The middle class – we were struggling before but now we are defeated. Let me explain what we are all slowly finding out.
I met with my insurance agent to renew my very small group policy for this year. Another 18% increase with no good options. If I close the group policy and spin everyone on their own the rates are actually a little cheaper. Yay!!!!! But let’s look a little further:
Current situation (I will use some rounded numbers for a general idea)
$5,000 a year for health insurance – pre-tax split between employer and employee.
New plan: Everyone buys their own insurance and get a raise from employer to compensate for the difference which will be taxable.
Salary goes up $5,000.
FICA/Medicare tax goes up $765 (15.3%) split between employer and employee.
Fed Tax goes up (let’s guess $300) paid by the employee.
State Tax goes up (every state is different – let’s estimate 2%) $100
Local Tax goes up (let’s say 1%) $50
Total tax increase of at least $1,215 a year split between employer and employee – Not a bad deal for the government. Again, not a problem for the rich or the poor, just the middle class.
For the employer: they get an increase in workman’s comp and liability insurance but they will probably save on some bookkeeping and admin expense.
So who is the winner here? I already had insurance that I liked. Now I need to find a new policy and I get the privilege of paying $1,200 more in tax.
What a deal!!!!!!!!!!
And you wonder why the people don’t trust you?