Cadillac Taxes

Speaking of new laws taking effect, there has been a rumor going around that for next year's tax season, a provision of the recently passed health care bill will kick in and people will be forced to pay income tax on their health insurance. "Starting in 2011," one email reads, "your W-2 tax form will be increased to show the value of whatever health insurance you are given by the company.... You will be required to pay taxes on a large sum of money that you have never seen."

The good news is, that's not entirely true. The tax is actually being levied on so-called Cadillac health care plans, ones that cost more than $23,000 per year. Although we rarely see the cost of our employer-provided health plans, the average cost of a plan for a family is about $13,400. For plans that exceed that $23,000 cost, the tax is 40 percent on the amount over the limit; so if your health care plan costs $25,000, the tax is 40 percent of $2,000, or $800.

And the tax is supposed to be paid by the insurance company, not the employer or you. But we can rest assured that any hit insurers are forced to take would be passed along to consumers before too long.