What is a Premium Tax? It currently does not exist, but it is possible that it is only a short distance down the road. Basically, a premium tax is a sales tax on health care paid by employers and individuals buying health insurance. It was written in the health care law as a way of keeping down costs for Medicaid (or MediCal for those in California). How would it work? Everyone that buys health insurance from a source other than Medicaid or MediCal would pay a tax on the cost of their premiums. This revenue would then be used to offset the cost of Medicaid and MediCal.
Will it be implemented? That depends. Right now there is a huge push to keep premiums down, but there are more factors and stresses pushing those premiums up then ever before. Congress would be crazy to implement this tax now, when in affect, the tax would be an additional cost on those premiums. Is Congress crazy? We will just have to wait and see. But when we find out we will share it with you.
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