As I understand it, here goes.
All employer contributions to health insurance premiums would be considered taxable income. However, an additional deduction would apply based on your status. For single taxpayers, a deduction of $7500 would apply, and for families, a deduction of $15000 would apply. The only way taxes would be raised is if you pay more than $7500 per year for a single insurance plan or $15000 for a family plan. To put that in perspective, the average family plan costs about $11000 and the average single plan costs about $4500.
If you're paying additional taxes, then one of the following must apply:
1) You have the world's best health plan;
2) Your employer does not care what the health plan they provide costs;
3) Your employer did not bother to negotiate a worthwhile price;
4) You did not attempt to shop around or pick a cost-effective plan.
It affects those with high-priced health plans. I understand the net goal of this is to encourage people to shop around and choose lower-priced health plans, ultimately bringing down the cost of health care. Also, if I'm correct, there is a financial incentive for getting under that cap limit (the deduction applies whether you spend $7500 on health premiums or not).
Thanks for that explanation - it helped.
Mine is less than $3,000
and I feel I pay too much
since I never go to the doctor.
I keep a high deductible to keep the monthly down
basically a catastrophic plan
Bush pulling out his Ace of Spades....National Security
1) You have the world's best health plan;
2) Your employer does not care what the health plan they provide costs;
3) Your employer did not bother to negotiate a worthwhile price;
4) You did not attempt to shop around or pick a cost-effective plan."
5) As everyone is covered by private insurance, the rate to cover each one will increase.
In other words, in order to obtain the same coverage you have now, you and your employer will have to pay more. In a few years the $15,000 deduction will look like nothing and the AMT effect will come into play. Everyone who currently pays no extra tax for health insurance will be paying through the nose.
There is no such thing as a free lunch. Someone always has to pay.