Navigation Links
New Research From EBRI: Study Examines Issues in Capping Tax Exclusion of Health Coverage
Date:1/15/2009

WASHINGTON, Jan. 15 /PRNewswire-USNewswire/ -- The nonpartisan Employee Benefit Research Institute (EBRI) today published a detailed study of the implications for employers and workers involved in capping the tax exclusion for employment-based health coverage, an issue that could come up during this year's expected debate over overhauling the nation's health care system.

Changing the tax treatment of employment-based health coverage has been a policy goal of both parties as far back as the 98th Congress (when Ronald Reagan was president), writes Paul Fronstin, director of the EBRI health research and education program and author of the study in the January 2009 EBRI Issue Brief.

He also notes that because employment-based health coverage is by far the most common source of health coverage in the United States, proposals to change the way coverage is taxed could have "far-reaching implications" for employers and workers.

The Issue Brief, available online at www.ebri.org, includes the following points:

  • Current tax treatment: The amount that employers contribute toward workers' health coverage is generally excluded, without limit, from workers' taxable income. In addition, workers whose employers sponsor flexible spending accounts are able to pay out-of-pocket expenses with pretax dollars. Employers can also make available a premium conversion arrangement, which allows workers to pay their share of the premium for employment-based coverage with pretax dollars.
  • Tax cap recommendations: In 2005, a presidential advisory board concluded that limiting the amount of tax-preferred health coverage could lower overall private-sector health spending. The panel recommended a cap on the amount of employment-based health coverage individuals can exclude from their income tax, as a way to reduce health spending.
  • Implementing a tax cap: While a tax cap on health coverage sounds simple, for many employers it would be difficult to administer and results would vary by employer based on the type of health benefit plan, the size and demographics of their workforce, and even where the workers live. The change would be especially difficult for self-insured employers that do not pay insurance premiums, and would have to set the "premium equivalent" for each worker. This would not only be costly for employers, depending upon the requirements set out by law, but could also create fairness and tax issues for many affected workers.
  • Administrative costs: For self-insured employers, calculating insurance premium costs under a tax cap could be done fairly easily using the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) premium equivalent. However, whether self-insured employers would be able to use the least costly method to determine the value of coverage will have to be determined by law and/or regulations.
  • The Sec. 89 experience: Section 89 of the Tax Reform Act of 1986, which attempted to make employee benefits more standard and fair, became so controversial that it was repealed by Congress in 1989 -- in part because the regulations created regulatory burdens that were so complicated and costly as to be unworkable. Similarly, valuation calculations under a health coverage tax cap could become overly burdensome if the lessons from Section 89 are not heeded.

EBRI is a private, nonprofit research institute based in Washington, DC, that focuses on health, savings, retirement, and economic security issues. EBRI does not lobby and does not take policy positions. www.ebri.org


'/>"/>
SOURCE Employee Benefit Research Institute
Copyright©2009 PR Newswire.
All rights reserved

Related medicine news :

1. Stanford researchers find culprit in aging muscles that heal poorly
2. Children of depressed moms do better when dad is involved, SLU researcher finds
3. UCLA researchers identify markers that may predict diabetes in still-healthy people
4. Mayo Clinic researchers discover new diagnostic test for detecting infection in prosthetic joints
5. New research shows how chronic stress worsens neurodegenerative disease course
6. New research explores newborn in-hospital weight loss
7. Research may unlock mystery of autisms origin in the brain
8. Bipolar disorder relapses halved by Melbourne researchers
9. HIVs impact in Zimbabwe explored in new research
10. U.S. Research Funding Continues to Flatten as U.S. Health Costs Climb - in August 31 Science
11. Cell that triggers symptoms in allergy attacks can also limit damage, Stanford researchers find
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:9/22/2017)... (PRWEB) , ... September 22, 2017 , ... ... operations and financial setbacks, a senior finds a new lease on life with ... helped thousands of people resolve their problem with unsecured debt. The senior is ...
(Date:9/22/2017)... ... September 22, 2017 , ... “Cursed with ... an obligatory tithe, and the freedom experienced when breaking free from this misconception. ... author, Lysa M. Harrison. , Published by Christian Faith Publishing, Lysa M. Harrison’s ...
(Date:9/22/2017)... ... ... “Fruit of the Spirit: “Love””: a delightful adventure of two friends who play ... Spirit: “Love”” is the creation of published author, Halimah Jones, who was born and ... an avid writer, her inspiration for “Fruit of the Spirit: “Love”” blossomed from her ...
(Date:9/21/2017)... ... September 21, 2017 , ... With ProSlideshow Portrait from Pixel Film Studios ... Users can select from up to two layers of subject matter along with fully ... all within Final Cut Pro X. , With ProSlideshow Portrait each user ...
(Date:9/21/2017)... (PRWEB) , ... September 21, 2017 , ... ... **An FDAnews Management Report**, http://www.fdanews.com/products/54818-promotional-communication      , In the competitive world of ... can get while staying in compliance with FDA rules. , The FDA has ...
Breaking Medicine News(10 mins):
(Date:9/6/2017)... , Sept. 6, 2017   PDI , a leader ... will host an educational session focused on the role ... (CLABSI) prevention at the 2017 Annual Scientific Meeting of ... take place at the Phoenix ... from Sept. 16-19, will also feature PDI,s Prevantics® ...
(Date:9/5/2017)... 2017 Sapheneia and Scannerside received FDA 510(k) ... is a third-party Vendor neutral CT product that makes ... compliance with current MITA standards. ... solution is specifically designed to provide CT operators, prior ... doses over a predefined threshold. Scannerside Dose Check is ...
(Date:9/5/2017)... 5, 2017  Just 18 months after its February ... to announce the appointment of three new senior people ... Dominic Jones-Phillips and James Wright ... Tammy Wynne joins ... access writers. She has over ten years, experience in ...
Breaking Medicine Technology: