Another Surprise for Seniors in the Senate Health Reform Bill: A Tax on Their Employer-Provided Drug Benefit

As part of the Medicare Modernization Act in 2003, Congress created a new drug benefit — called Medicare Part D — for retirees at a cost of about $1,900 per recipient per year. Many private employers already provided drug coverage for their retirees, and the administration and Congress did not want to tempt employers into dropping their coverage… [So] the legislation created a $600 tax-free benefit (the equivalent of $800 cash for employers), and it worked. Employers continued to cover about seven million retirees who might have otherwise been dumped into Medicare Part D.

But now that subsidy is coming in to be clipped [by] a little-noticed provision buried deep in both the House and Senate health-care reform bills. Intended to save billions of dollars, [it will] instead hurt millions of seniors.

Full report from Tom Scully in The Wall Street Journal.

Comments (3)

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  1. Bruce says:

    More bait and switch. Get ready to tear up your AARP card a second time.

  2. Larry C. says:

    We need a huge supply of AARP cards. There are so many justifiable occasions on which to tear them up.

  3. Art says:

    Neither source mentions the 28%+ rebates from drug manufacturers that are included in the Employer-provided drug benefits that CMS recently changed to make any rebates above 28% be deducted from the authorized 28%.

    Is this where the $600 tax free amounts come from?