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:6/27/2016)... ... 2016 , ... TopConsumerReviews.com recently awarded their highest five-star rating to Best Buy ... in the United States and Canada wear eyeglasses. Once considered to be a purely ... make a fashion statement. Even celebrities use glasses as a way of creating an ...
(Date:6/26/2016)... ... ... Kasmer, a legally blind and certified personal trainer is helping to develop a weight loss ... plans to fix the two major problems leading the fitness industry today:, ... , They don’t eliminate all the reasons people quit their exercise program ...
(Date:6/25/2016)... , ... June 25, 2016 , ... "With 30 hand-drawn ... specific project," said Christina Austin - CEO of Pixel Film Studios. , ProHand ... all within Final Cut Pro X . Simply select a ProHand generator and ...
(Date:6/25/2016)... , ... June 25, 2016 , ... Conventional wisdom preaches ... success. In terms of the latter, setting the bar too high can result in ... than just slow progress toward their goal. , Research from PsychTests.com ...
(Date:6/24/2016)... Dallas, Texas (PRWEB) , ... June 24, 2016 ... ... 12th International Conference and Scientific Sessions in Dallas that it will receive two ... Announcement of the grants came as PHA marked its 25th anniversary by recognizing ...
Breaking Medicine News(10 mins):
(Date:6/24/2016)... Dublin ... of the " Global Markets for Spectroscopy Equipment" ... This report focuses on the global ... including its applications in various applications. The report deals ... three main industries: pharmaceutical and biotechnology, food and beverage, ...
(Date:6/24/2016)... -- The Academy of Managed Care Pharmacy (AMCP) today ... allow biopharmaceutical companies to more easily share health care ... coverage decisions, a move that addresses the growing need ... The recommendations address restrictions in the sharing of product ... a prohibition that hinders decision makers from accessing HCEI ...
(Date:6/24/2016)... SAN CLEMENTE, Calif. , June 24, 2016  American ... function testing company, is now able to perform sophisticated lung assessments ... ndd Medical Technologies , Inc. Patients are no ...  Thanks to ndd,s EasyOne PRO ® , ARL patients like Jeanne ... needed testing done in the comfort of her own home. ...
Breaking Medicine Technology: