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)... Lafayette, California (PRWEB) , ... ... ... a pioneer in the patient payment industry today announced its strategic partnership ... and health system workflows. , The two companies’ proven, proprietary technology combine ...
(Date:6/26/2016)... ... June 27, 2016 , ... Quality metrics are proliferating in cancer ... they remain in the eye of the beholder, according to experts who offered insights ... American Journal of Managed Care. For the full issue, click here . , ...
(Date:6/26/2016)... North Carolina (PRWEB) , ... June 26, 2016 , ... ... release of a new product that was developed to enhance the health of felines. ... for centuries. , The two main herbs in the PawPaws Cat Kidney Support ...
(Date:6/25/2016)... ... June 25, 2016 , ... ... and applications at AcademyHealth’s Annual Research Meeting June 26-28, 2016, at the Hynes ... important health care topics including advance care planning, healthcare costs and patient and ...
(Date:6/25/2016)... ... June 25, 2016 , ... "With 30 hand-drawn hand gesture animations, ... Christina Austin - CEO of Pixel Film Studios. , ProHand Cartoon’s package transforms ... Final Cut Pro X . Simply select a ProHand generator and drag it above ...
Breaking Medicine News(10 mins):
(Date:6/23/2016)... , June 23, 2016  MedSource announced today ... its e-clinical software solution of choice.  This latest ... possible value to their clients by offering a ... preferred relationship establishes nowEDC as the EDC platform ... MedSource,s full-service clients.  "nowEDC has long been a ...
(Date:6/23/2016)... Any dentist who has made an implant supported ... Many of them do not even offer this as a ... laboratory costs involved. And those who ARE able to offer ... high cost that the majority of today,s patients would not ... Zadeh , founder of Dental Evolutions Inc. and inventor of ...
(Date:6/23/2016)... startling report released today, National Safety Council research shows ... plan to eliminate prescription opioid overdoses. Prescription Nation ... the worst drug crisis in recorded U.S. history, assigned a "Making ... , New Mexico , Tennessee ... states, three – Michigan , Missouri ...
Breaking Medicine Technology: