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November 06, 2005
Employer Sponsored Health Insurance or Health Savings Accounts
An advisory commission appointed by the president to examine tax reform issued its report this past week. One of the things they addressed was employer-sponsored health insurance. Currently, employers and the self-employed get a 100% tax write-off for the premiums they pay for health insurance. No one else does.
This tax break is the largest that the federal government provides, estimated to amount to $141 billion in 2006. Because of this tax advantage, employers are more likely to provide increased benefits and reduce the amount they pay in wages. The panel estimated that an across-the-board tax cute of approximately 14% could be funded if this tax break, offered to just certain individuals and corporations, were eliminated.
Their recommendations, however, are not that harsh. They suggest that individuals should be able to write off $5000 for health insurance costs, and families should be allowed up to $11,500 write off for health insurance expenses. This would be whether they get their health insurance from their employer, or buy it on their own.
This would of course be a much fairer system than the current one, and would have the added benefit of encouraging individuals to own their own health insurance (that they could take with them if they changed jobs), rather than being tied to an employer-sponsored plan.
It will be interesting to watch the politicians fight this one out.
Find out about the High Deductible Health Insurance advantage at HSA for America
Posted by Wiley Long at November 6, 2005 04:17 PM