Skip to comments.Bush to float health insurance tax break
Posted on 01/20/2007 8:18:47 AM PST by PtrainerNYC
WASHINGTON - President Bush will propose in his State of the Union address a tax break for people who buy their own health insurance and a limit on how much coverage individuals can receive tax free at work. ADVERTISEMENT
The proposal to be announced Tuesday offers a tax deduction to people who purchase coverage and urges those with generous plans to either embrace cheaper insurance or pay taxes on part of it, according to a Bush administration official familiar with the proposals.
If passed by Congress, the plan would be the first time that workers could get a tax break for buying their own insurance. At the same time, it would be the first time that some employer-provided health care benefits could be taxed.
The Sub-S stuff was new for 2006. My boss was pissed. The $10K that we paid in premiums was taxable this year. Not FICA taxable, just federal and state.
"I am in a 'temporary' job 42+ hours per week, 52 weeks a year. My position is expected to last for 7-8 years. No health care, no vacation, no pension, no sick days...nothing."
Having lived here since 1966 (when my father took a government job), and having done federal contracting for most of the last 15 years, I've only known two other folks with one of those "temporary" positions.
It seems to me that the trend for the government is to outsource that kind of thing. Makes it easy to get rid of folks they don't like.
Technically I am an intermittant Federal employee but I am one of those who fall into the position of working a regular full time position while being officially categorized as intermittant.
Not getting paid benefits is something I understand, I knew that when I signed on. Not being able to buy into the Federal plan with my own money is something that really stinks though.
I just checked the IRS rules for 2006, and here's a quote:
Actually the segment of the Federal government that I work for categorizes 2/3rds of its force as "intermittant", thus they get no benefits, vacation etc. Of the thousands of people in this group, a significant number actually are intermittent (they don't work full time, year round) but hundreds if not thousands more, do perform full time.
Many are covered by the VA or various other government plans, some others are on their spouse's insurance. Unfortunately none of those options work for me and as it is right now, there is no way I as a single unaffiliated individual, can afford to buy health insurance.
A health insurance tax break would really help a guy like me.
"A health insurance tax break would really help a guy like me."
It makes no sense that people who work for companies who provide heath insurance to their employees get tax free insurance, yet people who have to pay for it themselves have to pay for it with taxed dollars.
Our government has screwed this up with tax laws. If it were totally left to our free market system, we would not have a health care problem.
Okay, look folks. Look at this thread. Everyone has had to go out and do major contortions to find their own solutions to their own individual problems -- and many replies say that only recently did they discover solutions.
The pre ex issue remains enormous. Oh, and the person to went from BCBS in one place to another . . . NO . . . that did not solve your problem. The new locale BCBS does have to take you, but they don't have to take you at the original price. They will jack your premium.
Pre ex in effect prevents you from relocating. Yes, a lot of this is state to state -- but look at this thread. Look at the contortions to find a solution -- and the solution you find will jack its prices double digit % per year.
Bush is stepping out and raising the issue. The GOP HAS TO HAVE A VOTE WINNING POSITION ON THIS BECAUSE IT WILL BE AN ENORMOUS 2008 ISSUE.
My suggestion is a federal mandate that all individual policies are, in total, a group. They get group rates and no pre ex exclusions. The insurance industry would be hit by this. The answer is a tax cut for that industry to compensate. This looks to me to be a solid tax-cutting conservative approach.
"My suggestion is a federal mandate that all individual policies are, in total, a group. They get group rates and no pre ex exclusions."
The difficulty here is that many folks would sensibly refrain from buying health insurance until some major illness arose.
Without the ability to exclude pre-existing conditions, or to require continuous coverage in lieu of the exclusion, health insurance companies would receive individual policy premiums primarily from sick people, and not from well people.
Insurance doesn't work so well under those circumstances.
Your idea only works if there is an individual mandate requiring every adult to obtain health insurance. This hasn't usually gone over well with some segments of the Republican coalition.
The difficulty here is that many folks would sensibly refrain from buying health insurance until some major illness arose.
I think I disagree with this, and this is the focus of your objection. Group plans for employers cover everyone. Individual policies would be bought by those who choose to buy them. Yes, maybe this hurts the insurance industry, but that's what the industry targetted tax cut is for.
I am not invested in my own suggestion. My only focus here is to get the GOP recalibrated. Health Insurance used to be something that was not a conservative issue. It has to become a conservative issue NOW or we will lose 2008. I think it may be the #1 issue of 2008.
Exactly where do free markets exist???? All markets are imperfect to one level or another, the more complex, the less free. I bet the insurance companies would love for everyone to buy their own insurance, then it would be their actuarials, government lobbyists, marketing shills, and MBA braintrust against each and every consumer. And if it were wide open, there'd be no explicit or implicit price collusion; none whatsoever...eyes rolling...
The markets are largely free as is. Competition does exist. The problem is the double digit % price increases, and of course that derives from defensive medicine because of malpractice lawsuits.
Those are not going to change. An incremental approach can work. Just attack the pre-ex issue by making all individuals part of a group, and group plans can't exclude pre-ex. Compensate the industry for their loss with a tax cut.
It's a very philosophically conservative tax cutting approach.
Can someone explain the difference between Democrats and Republicans again? Lately, I'm having a hard time differentiating between the two.
You'll always find people here who defend the Republicans, no matter what foolish things they do.
One has an R after the name, the other a D, that's about it, I believe both creatures are invertebrates.
Closing loopholes is not a tax increase if rates are reduced commensurately. Or if other taxes are cut so that it nets out.
That said, yes: I want to close your loophole. I would get pinched by it too. But it's good tax and health policy nothwithstanding.
Early retirees who take advantage of the HIPPA mandate which requires any company selling individual policies in a state to issue a policy notwithstanding pre-existing conditions, don't have the immediate threat to their life savings. Unfortunately, there's a specific time limit on the ability to do this, and many aren't aware of it. For those who are, and do, the issue's the cost of the individual policy rather than the availability.
COBRA until your COBRA runs out, then HIPPA it. You'll pay about twice the normal cost of an individual policy, but you'll be covered.
Yes, it will be a huge issue. The Democrats will say "We're going to give you free/government funded health care with no hassles. You just to the doctor when you want to. The system will take care of everything." This will appeal to a lot of people.
However, this will be rationed care with government gatekeepers hidden well out of site. The dems won't bother to point that out. Since a rationed federal system can coast for some years on the existing infrastructure, the real damage only becomes apparent downstream. That's the political difficulty we face.
Were you absent the day in Econ 101 when they taught there is no such thing as a FREE lunch?
"Group plans for employers cover everyone. Individual policies would be bought by those who choose to buy them."
This implies that you're looking for the group plans to subsidize the individual plans.
For a variety of reasons, this might be problematic. I'm not sure that it would fly in every state, that insurance commissioners would uniformly permit this. As well, insurance companies who did this would be at an extreme disadvantage in trying to be competitive in the group market, as their group plan rates would be driven higher compared to those who refused to subsidize individual plans through group plans.
But without the subsidization, individual plans would become death spirals. They would start out with sick folks and high premiums, and as folks were driven out of the plan due to cost, only the sickest would be left, thus driving up the premiums.
I agree, though, that the political party that at least appears to offer an acceptable plan will be a big winner.
I'm not sure, though, that many of the suggestions I see put forth really address the biggest underlying problems.
I can hear the Unions screaming now. When you are paying $750-1500 per month for HI, how can that not be income? Since they shot down his attorney bill, may as well attack the other side.
Pray for W and Our Troops
You people who post articles, then start off with your own falsely negative spin make me sick.
The first sentence from the article states:
President Bush will propose in his State of the Union address a tax break for people who buy their own health insurance...
That's excellent news considering how many people in this country buy their own health insurance. Like millions of others, I qualify for absolutely zero tax breaks. I do not own a home. I do not have dependent children. I do not own a business, but work as a "contract" employee in the IT department of a large corporation.
If this passes, finally there will be a tax break that helps me and people who are in a similar situation.
tax employer provided health benefits - and you will see employees start to reduce their level of coverage to reduce their tax burden on it. that's what will happen.
OK - you want to get the employer out of the loop and take it fully private. fine, propose medical 401Ks. I contribute (pre-tax) to the fund, my employer matches a portion of my contribution (tax deductible), and I buy my own private plan with it.
but the idea that some new round of taxes on people who already have health coverage, is going to solve the problems we have with the system, is crazy. it sounds like something the Dems would propose - we'll tax the system to reform it.
we already have that - through deductibles and co-pays. I pay for the first $1200 of medical costs (including drugs), without getting a dime back.
your second point is right on - wage earners are already paying for medicaid to provide the underclass and illegals with health care, now we have to pay some new tax for our own coverage?
fine, then propose medical 401Ks. that's the way to get to where you want to go.
and what will happen here is - the boomerang effect will give us univerasl medicare. put a new box on everyone's monthly wage statement that shows a new tax on their employer provided health care, and they will throw up their hands and embrace a full government solution.
the idea that we can tax our way to health care reform, is insane.
correct - this is going to implode on us for 2008. Hillary will just offer universal medicare, and we'll be out there offering to tax employer provided health benefits.
I'm currently cruising through TurboTax after receiving the W2 for myself and my wife. My federal taxes are around $38,000 this year...and I'm not finished. My company went public and forced a dividend down the throat of every stockholder to buy down the stock price before splitting. That was equity I really didn't want drained. Now I have to wait for a 1099-DIV to continue doing my taxes.
It is even worse. The illegals are getting free medical care and we, the American workers are getting the shaft. This is just the beginning of the socialist agenda.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
and that's why, when people see that they are being taxed on their employer provided health benefit - their first reaction will be "I barely use this plan, so I'll drop it to save on taxes". this tax idea will result in less people having coverage. as a general rule, if you want LESS of something - tax it. tax employer provided health benefits, you'll get less of it. and those newly uninsured people, will be more willing to accept the idea of a national health care plan.
I work for a sub-s company.
More Bush pandering to the left and it fits right in with his shamnesty plans.
"However, we just started a plan with an HSA component, and as the owner, I don't get the deduction for contributions to my own Health Savings Account (although, of course, my business gets a deduction for contributions to my workers' accounts)."
Here's some good news for a Saturday. I could double check when I'm back in the office but you get the deduction on your return. The company will pass it on to you as income and then you get the full deduction on your return. In the end it's semantics. Not many folks understand these things yet but I believe all you miss is the instant gratification.
"I work for a sub-s company."
I own one.
"Here's some good news for a Saturday. I could double check when I'm back in the office but you get the deduction on your return."
Well, I'll have to check with my accountant, but my insurance agent, who also owns his own small insurance brokerage, assured me that I don't get and tax deductibility for the funding of my HSA.
you'll see - government employees, teachers, etc - who receive health benefits as part of their compensation, will be exempt from this somehow. either they will fall below the exemption limit (7500 single, 15000 family), or will just be excluded.
is my parking spot at work considered an "employer provided benefit". should it be added to my wages for tax purposes? how about the free coffee they make available to me?
Good eye, Wolfstar. I see the poster has been banned.
Yep, I'm sorry but you'll have to pay. We must be fair and get you on the same level as everyone else. It's the Communist way.
Read your 2006 Fringe Benefits section on taxable benefits.
The 28% rate was achieved by broadening the base. Even then, the reformers didn't tackle the big tax expenditures, which we should. Income is income. Treat it all the same.
and the biggest area - taxes on unearned income - is obscene. people like Theresa Heinz Kerry and the Walmart heirs, making interest income off huge trust funds, paying no payroll taxes, and a low income tax rate.
"The average working person is already burdened heavily with taxes at every level, I find it hard to believe you espouse even more taxes in the interest of "fairness". Why don't you just pay everyone the very same salary, take the very same amount out for taxes, etc. Now wouldn't that be perfectly fair?"
Bush appears to be trying to revive Stalinism.
It's a good idea. Bush is trying to remove the unfairness of NOT taxing employer-paid health premiums. (Would it be fair to NOT tax employer-paid mortgage payments, or car payments?)
Bush wants to move away from the current unfairness. He will be xxxx upon, criticized and slammed for it.
I would go all the way. Tax employer-paid health premiums.
leave their taxable status alone, but provide a 100% deduction from gross income for health premiums paid by the self-employed and those whose employer doesn't pay for health premiums.
No other way is fair.
Personally, I think that Joe is a bit more astute than Sam....A benefit is just that a benefit. In a free system we make the cognitive decision to work at the corner grocer or for a company that offers non taxable benefits. Unfortunately, Our two party system has evolved into a choice between which type of socialism do you prefer. One party represents those that are waiting for the next political handout and the other is determined to undermine our middle class in the spirit of globalization. I think this is a huge issue that the Freepers need to take notice of.