Is there any definitive word about whether employer based health insurance will be taxed?

[MoonRiver]

I hear one conflicting story after another. :shrug:

[Horse with no Name]

1. I don't think there are many definites

but I totally am against this.
Totally.
If we can't do better than this, then we need to get better representation.

[MoonRiver]

3. I'm totally against it too.

It sounds like both Dems and Repubs are lining up to fight it. But I know how things go down in Washington. :(

[dkf]

2. I guess we won't know until we see a bill.

But I think that is a surefire loser and a good way to lose elections.

[Eric J in MN]

19. Especially since Obama criticized McCain in 2008 for wanting to tax healthcare benefits. NT

NT

[Hello_Kitty]

4. What I keep hearing on sources like NPR is that it's top-shelf benefit plans only

Supposedly, if you get a "Cadillac Plan" from your job you may pay taxes on a portion of it. Sorry, that's about as definitive as I've heard.

[Horse with no Name]

6. I have a "Corvair Plan"

However, I am quite certain that my employer would call it a "Cadillac Plan" because it is the most expensive one they offer.
It is all in the wording.

[MoonRiver]

7. My husband has the best insurance offered.

We don't mind paying if there would truly be excellent health care for everybody. But I think it's going to be a bare bones variety. This is not looking good.

[lindisfarne]

9. Only what the employer pays in excess of some specified amount would be taxed;few have such a policy

The tax could be avoided (should such a tax be instituted) simply by the employer cutting back the employer contribution to below the cut-off amount.

[Statistical]

12. So employers wil avoid the tax by making healthcare more expensive.

Yeah that sounds like a winner.

No company will offer benefits above the "magic line" so revenue raised will be next to nothing.

Lose-Lose.

[Eric J in MN]

18. Right. The supposed revenue which would be raised...

...is probably predicted with an assumption that coverage won't be reduced.

Which it will be.

[lindisfarne]

24. See #22. These excessive policies often simply lead to waste. E.g.: Execs who can get full-body

MRI scans at the insurance company's expenses - except physicians have clearly come out and said this is a waste of money.

[Eric J in MN]

31. There are very few people who want to get MRI scans on a whim. NT

NT

[lindisfarne]

32. Obviously. They're expensive. But if insurance covers, more people will want them. And they aren't

cost effective. Thus the quote from the article.

[Eric J in MN]

33. I wouldn't get an MRI on a whim if it were free. Nor would most people. NT

NT

[lindisfarne]

37. Read carefully: " But if insurance covers, more people will want them". 50% of the population does

not have to want them in order for the increase to have a significant impact on health care costs. The original point is that SOME people have excessive UNTAXED health insurance coverage which WILL cover this - and this benefit IS used.

[Statistical]

39. Except no company would be stupid enough to keep such a plan.

They would simply reduce the plan down to the max and pay the well compensated employees more.

You know who won't be able to reduce the plan.
Unions because they have a contract with the company.

So the vast majority of plans will be reduced to crappier ones because it doesn't make economic sense to keep them.
Unions on the other hand might keep the plan for a short while (so most of the taxes paid by middle class) however the added taxes will make the union less competitive.

This is why this stupid Republican plan is opposed by AFL-CIO.

http://blog.aflcio.org/2009/07/08/americas-workers-oppose-taxing-health-care-benefits/

[lindisfarne]

41. For unions, an exception was proposed until their next negotiation period. At that point, the union

can decide to negotiate for higher wages and trade off some benefits.

Again, many pay SIGNIFICANT co-pays, co-insurance, deductibles, even HEALTH INSURANCE PREMIUMS, with money that's been taxed.

How is it fair that some get no tax benefit whatsoever, while others get significant tax benefits, when it comes to health related costs?

[Statistical]

43. Except the unions are still against it. They met Obama and asked him NOT to support this.

So I stand by my statement:
Republicans - for it
McCain - for it
Unions - against it
Democratic leadership - against it
Obama - ??? was for it now statements seem mixed

sure you don't want to rally support a FR?

[lindisfarne]

44. I support removing disparity, as I've said elsewhere. Some pay thousands for insurance premiums with

taxed money, plus pay for extensive medical bills using taxed money.

Others get a huge tax benefit.
How is this fair? It hurts the lower income families disproportionately.

[Statistical]

46. Do you have proof of that?

It is unlikely poor income families buy health insurance outside employer coverage.

By the very fact they are poor would indicate they have no funds to buy expensive health insurance.

Most poor have either no insurance or govt insurance such as Medicaid.

It is more small businesses and middle class that buy insurance outside of employer (tax free plan).

If you want to make it "fair" then simply allow health insurance premiums paid out of pocket to be tax deducible.

Why raise taxes on those with good health insurance why not help those who are paying out of pocket?

[lindisfarne]

47. I said "lower income". Did you miss that? I know plenty of "lower income" folks who are

paying exorbitant health insurance premiums using after tax dollars, who aren't eligible for any state programs. Perhaps you don't associate with such people? Some have even posted their stories on DU.

Do you read carefully???? You seem to see what you want, rather than what is written.

[Statistical]

49. Well make out of pocket health insurance premiums tax deductible. Problem solved.

Also most studies show lower income people who have no cheap employer based coverage just end up with NO coverage.

They are unable to afford the premiums (tax deductible or not) given that they have a lower amount of disposable income.

There are very few working poor who have no employer based health care and yet devote 30%, 50%, 70% of their take home pay to buy expensive non-deductible coverage.

Are there some? Sure I guess so but generally the poor don't buy coverage because it is too expensive hence the reason there are millions of uninsured Americans.

[lindisfarne]

50. Except we are having difficulty coming up with the funding to PAY for health care reform. Adding tax

cuts only ADDS to its cost. One reason for taxing excessive health insurance benefits was to RAISE money to cover the cost of health care reform.

You'd also have to make co-pays, co-insurance, & deductibles tax deductible, to equalize the tax benefit some get from employer paid health coverage which doesn't include co-pays, co-insurance, & deductibles, and so on.

[Statistical]

52. Nobody has insurance that has no copays, no deductibles, no co-insurance.

That is just stupid.

Employers aren't in the business of allowing employees to just waste money.
They learned a long time ago that copay & co-insurance are a way to reduce how much healthcare is used.

The more healthcare is used the more the premiums go up next year.
Even if employers wanted such "super" plans they couldn't afford them, 10%-20% rate increases for a decade or to has made that all but unaffordable.

The lowest copays & con-insurance are GOVERNMENT plans. I know I had Tricare Prime and I also had worked as data analyst for govt at one time.
Both plans blew away anything I have seen in private sector.

You also haven't addressed the fact that the system is just punitive. It won't raise revenue.
The numbers being floated are based on current plans. If the bill is passed the plans will be reduced to whatever the cap is.
Employers aren't looking to pick up an added cost which makes the uncompetitive and as a result pay employees less than their competitors do.

Actual revenue will be essentially nothing and Americans will have crappier healthcare.

[lindisfarne]

53. This issue is disparity - some have much larger deductibles, some have higher coinsurance payments

(sometimes co-insurance is a percent of the total).
Some have larger co-pays; some copays apply to all visits while other visits have copay waived.

If employees get lower out of pocket expenses based on employer-paid (untaxed) benefits, there is an unfair discrepancy.

[Statistical]

34. Once again it is IMPOSSIBLE for a company to have ...

an "Executive plan" and a "crappy plan" for the rest of the workers.

Health care costs are based on:
* quality of the plan
* age of workers
* location

It is very telling that no CEO who love to waste money on MRI they don't need have come out against this STUPID idea.

Who has?

Oh yeah working class unions who often have the best benefits.

http://www.laborradio.org/node/11150

http://www.nytimes.com/2009/03/15/us/politics/15health.html?_r=1

http://thecaucus.blogs.nytimes.com/2009/07/07/union-leaders-to-meet-with-obama-next-week/

http://blog.aflcio.org/2009/07/08/americas-workers-oppose-taxing-health-care-benefits/

Yup. You must have it right. The AFL-CIO is working to protect imaginary executive gold plated plans!

That explains it.

[lindisfarne]

40. Not true. "so-called “gold-plated” plans such as the $40,543 in health benefits paid to Blankfein,

The policy is aimed at so-called “gold-plated” plans such as the $40,543 in health benefits paid to Lloyd Blankfein, chief executive of New York-based Goldman Sachs Group Inc., the fifth largest U.S. bank by assets.

People without such "gold-plated" plans end up paying more in co-pays, deductibles, co-insurance, and not all have the option of paying these additional costs with "before tax" money.

Individuals who need to buy individual insurance don't get any tax break - they pay their premiums with after tax money. Again, how is this disparity fair???

[lindisfarne]

20. I don't get the opposition to taxing excessive health benefits. The position is neither logical nor

fair.
Failing to do it simply means some get more tax-free compensation than others. The highest paid are the ones who generally get the health benefits with the highest value. You're protecting them. Would you also like to advocate for not taxing salary that exceeds $500,000?

If an employer pays more for health insurance, they pay less in salary for most (non-executive) workers. In any company, TOTAL compensation is examined when raises are being considered.

I'm all for leveling the playing field on this one. I'll guarantee that few families making less than $125,000 will be affected by the tax, based on the value of the "excessive" policies that have been seriously discussed.

[Statistical]

29. Well if you "guarantee it" then sign me up.

Health benefits are defined by the COMPANY not income.
All employees must be given access to health benefit in order for it to be a "qualified plan" = tax free.

The biggest group against taxing health benefits are......... Unions.

Middle class workers will be hurt

Union leaders also said they wanted to reiterate their opposition to enacting a tax on employee-provided health benefits to help finance health-care reform. Such a move that would hurt union members disproportionately because so many receive health benefits from their employers.

http://thecaucus.blogs.nytimes.com/2009/07/07/union-leaders-to-meet-with-obama-next-week/

Tax treatment of employer-sponsored health-care cuts across party lines: Prominent Republicans such as New Hampshire Sen. Judd Gregg support a tax on certain health plans, while Democrats such as Ohio Sen. Sherrod Brown say a tax would unfairly hurt middle-class workers with good benefits.

Health analysts from across the political spectrum have pressed for changing the tax treatment, arguing in part that the exclusion provides the greatest tax relief to high-salaried workers with generous insurance plans.

Last month, Baucus said he was eyeing a benefit cap. Experts have outlined two likely approaches: taxing benefits for workers above a certain income level; or taxing benefits exceeding a certain value, perhaps $14,000.

http://seattletimes.nwsource.com/html/politics/2009292750_healthcost030.html

$14,000? I live in VA (a relatively low cost of living state) and my health care benefits cost $10,800 per year. The same EXACT plan in a state like NY or CA might easily be over $14,000. A company with older workers (teacher unions?, air traffic controllers?, most auto unions?) would have higher costs.

Costs vary based on the location, sex and age of workforce. The plan says younger people in low cost states deserve good health care, older people in high costs states must have crappier health care,

If you think this will raise $1 you are a fool. Employer would simply cut benefits to $14,000 per year. Period.

Still ready to "guarantee it"?

[lindisfarne]

35. I have a bridge in Brooklyn to sell you if you think I can guarantee it. I cited the DEBATE

which has been ongoing about this. With greater regulation, cost disparities based on region could be decreased. Debate has also included the concept of a basic level of coverage (surely you're aware of this?) which defines the minimum an employer (and insurance company) must offer.

But sure, go on advocating for the CEOs to get ridiculous levels of health insurance coverage tax-free. They need it.

http://www.commondreams.org/headline/2009/06/28-3

Under the current proposals, a tax on health benefits would affect only those with pricey health plans. The idea would be to tax as income the portion of health benefits worth more than a specified limit. Officials are considering several options, including one that would set the limit at $17,240 for family coverage and $6,800 for individuals.

[Statistical]

38. McCain is for it. Republicans are for it. Unions are against it.

I guess the Republicans are looking out for the middle class and the Unions are protecting executives.

ONCE AGAIN HEALTH CARE PLANS ARE DEFINED AT THE COMPANY LEVEL
If the super goal plated $1 MRI plan is available for a CEO it is available for the $18,000 janitor too.

Most companies don't offer super crazy stuid healthcare that costs them $50,000 in health care benefits for a janitor they pay $18,200 a year in wages!

If one employee in a company is given healthcare then every single employee must be offered the EXACT same plan.

[lindisfarne]

42. See #41. n/t

[cherokeeprogressive]

21. That is the most concrete information I've ever seen about taxing health benefits.

So you're saying that yes, at least some]/i] health benefits will be taxed for certain, if those benefits amount to a predetermined amount. Where can I find that?

[lindisfarne]

27. In fact, you've missed the hypothetical "would" and "could", as well as all the discussion which has

gone on in congress. When congress has discussed this, yes, they have discussed benefits which exceed some predetermined value, and yes, those amounts have been quite high. The debates are out there - try google, for example, if you want some information.

It seems pretty obvious to me that if we're still waiting on the Senate Finance Committee bill & the House bill that much could still change. Does that really need to be made explicit? Do you not understand that if it's not explicitly stated?

But if people want to know what's been debated, the information is out there and in line with what I've stated.

[Salviati]

5. seems kind of bass-ackwards...

We should be taxing corporations that _don't_ provide affordable health care to their employees.

[Eric J in MN]

13. Yes. The government should be encouraging generous healthcare benefits...

...not discouraging through taxes.

The rich managers who decide a corporation's healthcare plan would have a personal motive to make the plan stingy to avoid paying more taxes if healthcare benefits are taxed.

[lindisfarne]

8. Has the final bill been signed by the president? If it will be taxed, only the most comprehensive

policies will be - few will have such a policy.
A tax on high-end policies is one way of getting more taxes out of the extremely wealthy who get these kinds of policies.

[Eric J in MN]

11. There is no bill yet. NT

NT

[lindisfarne]

14. Obviously.Question was rhetorical, to make a point.n/t

[Horse with no Name]

15. Who defines comprehensive?

That is where the meat will lie.
My employer offers 4 choices and there isn't that much difference (other than cost) in the 4 choices.
1. None
2. Healthcare Savings Account
3. Low plan insurance: outrageously high deductibles, co-pays with crappy coverage
4. High plan insurance: High deductibles and co-pays with slightly better than crap coverage.

[lindisfarne]

28. And under health care reform, your employer's offerings will likely have to change, to be

in line with new regulations.

The Senate HELP committee bill excludes high deductibles.

(But because so many others in this thread need the following to be said explicitly: No bill has been signed by the president. Much can still change. No house bill has been passed. No senate bill has been passed. But if people want to know what has been discussed, what the president has pushed for, the information is available if you stay on top of the debate.)

[Statistical]

16. For a plan to be tax free it needs to be offered to all employees.

Health care cost tends to be more dependent on age of employees, likelihood of chronic conditions, sex split of the industry (women have higher health care costs), and type of employment (coal miners union likely has high health care costs, a company like Microsoft that employs mostly young men who work in cubicles not so much).

There is no studies to show this would be paid mostly be the wealthy.

Of course no employer is going to offer a plan above the magic line they will simply offer "crappier" health care to avoid the tax.

[lindisfarne]

22. They, like other proponents, cite evidence that tax-free benefits encourage “gold-plated” policies

Mr. Orszag, an economist who has served as director of the Congressional Budget Office, has written favorably of taxing some employer-provided health benefits and using the revenue savings for other health-related incentives. So has another Obama adviser, Jason Furman, the deputy director of the White House National Economic Council.

They, like other proponents, cite evidence that tax-free benefits encourage what Mr. McCain called “gold-plated” policies, resulting in inefficient and costly demands for health care and pressure on employers to hold down workers’ pay as insurance expenses rise. And, they say, the policy discriminates against those — many of whom are low-income workers — who do not have employer-provided coverage.

http://www.nytimes.com/2009/03/15/us/politics/15health.html

[Statistical]

36. McCain that is your big gun!

Health benefit cost have NOTHING to do with income.

Many medium pay jobs have very good healthcare benefits.

Many employees have accepted wage freezes to avoid healthcare costs going up (thus employer is paying more).

The AFL-CIO is against this plan.

Healthcare for women cost more (over a lifetime and they live longer too) so jobs which have higher number of female/male split pay more for the same coverage.

Coverage also depends on the location. Costs are higher in high cost areas.

You belief that it will tax the rich because McCain says so is simplistic.

Why are the AFL-CIO and most other unions against this? Are they afraid it might hurt executives or it might hurt middle class workers?

[Eric J in MN]

10. 'Democrats Divide Over a Proposal to Tax Health Benefits'

http://www.nytimes.com/2009/07/09/health/policy/09health.html?ref=health

WASHINGTON — An effort by Senator Max Baucus of Montana to develop compromise health care legislation has come under sharp assault by fellow Democrats who have urged him to abandon a plan to help pay for the bill by taxing some employer-provided health benefits.

A tax on generous employer-provided health plans is favored by Republicans and several centrist Democrats. But opinion polls show the idea to be generally unpopular, and several senators up for re-election in 2010, including the majority leader, Senator Harry Reid of Nevada, have said they oppose it.

...“Working people in many cases have given up raises in pay and instead have gotten health benefits,” said Senator Barbara Boxer, Democrat of California, who is up for re-election next year. “So it seems unfair to now tax their benefits. I think that would be changing the rules in the middle of the game in a way that is so harmful and would set them back, so I have a real problem with that.”

And with some Democrats feeling emboldened by the swearing in of Al Franken of Minnesota as their 60th senator, there is strong reluctance to give Mr. Grassley too much sway over the legislation. Several senators suggested that Mr. Baucus had already conceded too much to win Mr. Grassley’s support.
===========================================

Barbara Boxer is right.

If you have a Senator or Rep who is involved in writing health-care legislation, then tell them NO tax on healthcare benefits.

[kestrel91316]

30. I thought I read on DU yesterday that the Baucus plan to tax medical benefits

was TOAST.

[endarkenment]

17. no - no bills have made it out of committee so there isn't anything

even close to a definitive word on any particulars.

[MoonRiver]

54. Does Obama have a timeline in mind for the passage of a health care bill?

I had heard he wanted it done before the end of the summer, but that now seems impossible.

[Cleita]

23. No, it looks like the White House is agin' it and Baucus has been told to

stop thinking about it. Even if something like this makes it into one of the bills, Obama won't sign it. So I think it's pretty safe to say that the issue is dead.

[MoonRiver]

25. Wow, thanks for that!

As Horse said above, there MUST be a better way.

[Pirate Smile]

26. It's dead. The President doesn't want it. Neither do most of the Dem Senators and they have

have polling to show it would be very damaging. The House wont touch it and doesn't want it either. It.is.dead.



Reid Loses Patience on Health Bill

Senate Majority Leader Harry Reid (D-Nev.) on Tuesday strongly urged Finance Chairman Max Baucus (D-Mont.) to drop a proposal to tax health benefits and stop chasing Republican votes on a massive health care reform bill.

Reid, whose leadership is considered crucial if President Barack Obama is to deliver on his promise of enacting health care reform this year, offered the directive to Baucus through an intermediary after consulting with Senate Democratic leaders during Tuesday morning’s regularly scheduled leadership meeting. Baucus met with Finance ranking member Chuck Grassley (R-Iowa) on Tuesday afternoon to relay the information.

According to Democratic sources, Reid told Baucus that taxing health benefits and failing to include a strong government-run insurance option of some sort in his bill would cost 10 to 15 Democratic votes; Reid told Baucus that several in the Conference had serious concerns and that it wasn’t worth securing the support of Grassley and at best a few additional Republicans.

By Tuesday afternoon, the Finance Committee began looking at ways other than taxing health benefits to deliver a health care overhaul that costs less than $1 trillion and is deficit-neutral, as Baucus wants. Baucus’ office declined to comment, but Senate Budget Chairman Kent Conrad (D-N.D.), a key member of Finance, confirmed as much late Tuesday.

“I would say there’s a search for alternatives,” Conrad told reporters. “There’s been feedback. There’s been additional questions in terms of getting the votes and public support.”

Sources said Tuesday’s Democratic leadership meeting centered around the serious concerns that Democrats have about the direction of Baucus’ legislation. Some Senators present apparently told Reid that Baucus’ focus on taxing health care benefits to pay for the overhaul was unworkable.
“They were saying, ‘I’m never going to vote for that kind of thing,’” said one Democratic source familiar with the discussion. The source added that the meeting then devolved into “a cacophony of voices against bipartisanship” because Senate leaders could not reconcile how they could attract Republicans without sacrificing too many Democrats.


http://www.rollcall.com/issues/55_3/news/36562-1.html

[lindisfarne]

45. The answer to your question, obviously, is NO. There's a huge disparity across people of same income

in terms of tax benefit they get. (The disparity gets even larger when comparing across different income levels).

Think of this: Many pay SIGNIFICANT co-pays, co-insurance, deductibles, even HEALTH INSURANCE
PREMIUMS, with money that's been taxed.

How is it fair that some get no tax benefit whatsoever, while others get significant tax benefits, when it comes to health related costs?

Some people essentially get at least several thousand dollars more in untaxed compensation (because of very generous health insurance benefits), while others end up paying >$1,000/month health insurance premiums using money that's already been taxed. With health care reform, the monthly premium will likely decrease for people currently buying insurance on the individual market, but whatever premium paid is still likely to be paid with after-tax money (I haven't seen any discussion about making premiums paid by individuals tax-deductible).

This disparity is not fair - and the poor and low to middle income folks are the ones most likely to be in the situation of not getting any tax benefit. I fail to see how defending this disparity makes any sense whatsoever.

============
Obviously, no final bill has been produced. But there have been debates, which discuss taxing health insurance benefits on the value that exceeds some set amount; those debates can be followed in the media. For example:

http://www.commondreams.org/headline/2009/06/28-3

Under the current proposals, a tax on health benefits would affect only those with pricey health plans. The idea would be to tax as income the portion of health benefits worth more than a specified limit. Officials are considering several options, including one that would set the limit at $17,240 for family coverage and $6,800 for individuals.

[Statistical]

48. So make health insurance premiums paid out of pocket tax deductible (like employer paid premium).

You rant about co-pays, co-insurance, and deductibles makes no sense. Those have never been tax deductible.

[lindisfarne]

51. Except we are having difficulty coming up with the funding to PAY for health care reform. Adding tax

cuts (making health insurance premiums tax deductible) only ADDS to its cost. One reason for taxing excessive health insurance benefits was to RAISE money to cover the cost of health care reform.

You'd also have to make co-pays, co-insurance, & deductibles tax deductible, to equalize the tax benefit some get from employer paid health coverage which doesn't include co-pays, co-insurance, & deductibles, and so on. This amounts to a tax benefit for those who have such plans. For those who have employer-paid health care which require copays, coinsurance, and so on, they get less of a tax benefit. Not fair at all.

I'm all for leveling the playing field - so all get the same tax benefits related to health care. I'm not opposed to making premiums, co-pays, co-insurance, etc. tax deductible in the same amount for ALL.

But you need to figure out where the money for health care reform will come from - because you've just added to the cost. Obama has clearly said health care reform has to pay for itself.