A benefits firm is urging employers that have been getting the Medicare Part D retiree drug subsidy not to panic.
The new Affordable Care Act – the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act – requires the government to tax the subsidy.
Congress created the subsidy along with the Medicare Part D prescription drug program, to encourage employers that already offered retiree prescription drug benefits to continue to offer the benefits.
Congress added a Medicare Part D subsidy tax provision when it adopted the ACA, in an effort to offset the cost of other ACA provisions, such as provisions providing a tax break for small groups with relatively low-income workers that offer health coverage.