Forthcoming Obamacare insurance tax a threat to public school budgets

Oct 30, 2013 by

MARIETTA, Ohio – In case there wasn’t enough confusion surrounding America’s new health care law, school leaders in Ohio’s Marietta City school district are warning that a new “Obamacare” tax could put the district in a financial bind once it takes effect in 2018.

Marietta City teachers currently receive generous health insurance benefits from the district – benefits the teachers union has protected by agreeing “to forego overall pay increases the last six years,” reports The Marietta Times.

But that arrangement may have to change, once district and teacher union officials sit down to negotiate their next labor contract early next year.

As things stand now, some of the insurance plans offered to Marietta school employees qualify for the new “Cadillac tax” that’s part of the Affordable Care Act (or Obamacare). Those insurance plans are seen as too generous under the new law, and will be subjected to a 40-percent fee on individual and family plans that exceed set annual costs of $10,200 and $27,500, respectively.

The Marietta Times reports, “Over a five-year period, Marietta City Schools would have to pay nearly $5 million in excise tax on just one of its three insurance plans, based on current prices and projected increases.”

Treasurer Matt Reed told the news site there’s no way the district can “pay out those types of dollars without (it) affecting the education of our students.”

School districts throughout Ohio and the rest of the U.S. are facing a similar dilemma that seemingly has no good solution.

Some school leaders will choose to ignore the looming problem, in hopes that Congress makes changes to the law before 2018.

Other optimists suggest the vast majority of union plans will stay below the annual cost caps of $10,200 and $27,500, thus making fears of the “Cadillac tax” much ado about nothing.

But as some analysts have noted, D.C. lawmakers created the new tax to help pay for the new health care law. The tax seems unlikely to go away, barring some major shakeup in the nation’s capital.

More proactive K-12 leaders understand this and will ask their local teachers union to either share the costs of the “Cadillac tax,” accept a scaled-back health plan, skip hoped-for pay raises, or some combination of all three.

Asking teacher unions to trade in their Cadillacs for Chevys (as one writer put it) could very well spark labor disputes in school districts across the nation.

If that occurs, it will just be another side effect from this new health care law that’s making a lot of Americans sick.

Forthcoming Obamacare insurance tax a threat to public school budgets – powered by Education Action Group Foundation, Inc..

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