By Dan Cook
As the Patient Protection and Affordable Care Act
continues through its shakeout cruise, there have been mixed results from some of the elements designed to either generate revenue to support low-cost insurance or save taxpayer dollars.
Example of the former: the tax on medical devices has fallen far short of expectations so far.
An example of the latter that has fared far better is the provision of the act that limits tax deductions for health insurance company executive pay.
The Institute for Policy Studiess decided to take a look at how this provision was doing. Quite well, the Institute concluded.
"Based on data for the 10 largest health insurers, we found that this virtually unknown Obamacare
provision saved American taxpayers tens of millions of dollars in 2013," the Institute reported.
The big-picture finding from the Insitute's study: $72 million in potential tax deductions was saved just from the exec salaries of top 10 publicly held firms. (Exec pay deductions are limited by the law to $500,000.)
“This $72 million in savings from limiting pay-related deductions for just 57 executives is the equivalent of the cost of dental insurance for 262,000 Americans or the average annual health insurance plan deductible for 28,000 people,” the authors wrote.
Digging deeper into the study:
- $72 million is the average annual health insurance plan deductible for 28,000 people;
- One major American health insurer, WellPoint, lowered its 2013 corporate tax bill by more than $1.5 million by accelerating the vesting of executive stock awards, a maneuver that made these awards taxable on Dec. 10, 2012, just days before the PPACA deductibility reform took effect. Thanks largely to the Affordable Care Act, WellPoint has gained 1.6 million new customers since last year.
- Health insurer executive pay levels did not decline in 2013, but the share of executive compensation that top health insurers could claim as deductible dropped from 96 percent in 2012 to 27 percent. On average, these 10 corporations owed an extra $1.3 million in taxes per executive.
There could well be more savings ahead for U.S. taxpayers, the Institute predicted, if the cap on executive pay
deductions gains more political support.
“There is growing support in the U.S. Congress to apply the Obamacare executive pay provision to all major U.S. corporations. This would save taxpayers $50 billion over the next 10 years while encouraging more reasonable executive pay levels,” the authors said.
Originally published on BenefitsPro.com