“We all know Obamacare is a pretty big law, with plenty of obscure provisions that don’t get much attention. For one, the law targets big executive pay packages at health insurance companies — and based on data released Wednesday, the provision is already going a long way.
Companies have long been able to deduct salaries to top executives from their federal tax bills, although since the early 1990s — in an effort to reduce excessive pay — the government has limited the amount to $1 million.
Starting last year, a piece of the Affordable Care Act lowered the limit to $500,000 for health insurers (although the $1 million limit still applies to the rest of corporate America). It also eliminates the tax carve out for what tends to be much more lucrative performance pay, like stock options, for health insurers. Finally, the cap applies to all health insurance employees, no longer just a firm’s four highest-paid executives.
This obscure provision resulted in a $72 million infusion to the Treasury last year from just the 10 largest publicly traded health insurers, according to an analysis from the left-leaning Institute for Policy Studies. The actual tax tab is probably higher when accounting for smaller insurers. And the Joint Committee on Taxation in 2009, a few months before the ACA became law, projected the provision would mean $100 million in revenue each year.”