What would taxing health benefts mean for us, monetarily?

What sort of changes would we expect to see out of our paychecks if health benefits were taxable? I have what is at best a half-decent health care plan...due to very high co-pays we shelled out around $8,000 in co-pays last year (AFTER exhausting our maxed-out FSA account). This proposal concerns me quite a bit.

and now this... it makes a person think this is worse than just leaving it alone! is that what they want?? us to just be happy to keep things as they are!! it makes me so mad to think about it.

Say your health insurance premiums are $10k/year and your employer pays half of that.

You'd have $5k added to your income for tax calculation purposes.

on 28K of income but pay the tax out of my 23k of cash income.

hmmm.

Of course, health benefits could be taxed at any rate that the law stipulates, but I think that's the most likely scenario.

then only private medical insurance on top could be considered to be a benefit in kind which as such would likely be taxable.

Assuming they use the UK's model , for example , single payer would be funded by tax on both the employer and the employee in addition to personal income tax but at a much lower rate.

At present the way in which single payer would be funded seems to be a greater issue to some than single payer itself. :shrug:

Whatever is introduced at first is likely to be amended at a later date any. So - isn't it best to just get single payer and then deal with it ? In other posts I've pointed out our rates of taxation for universal health cover which overall seem to be far less than your current private cover over there.

Your portion (monthly premiums not copays) + employer portion.

I think the average combined healthcare plan has $7000 in premiums.

So hypothetically.

$23K is 15% marginal rate. Your deductions and everything stays the same so each $1.00 added to your income results in $0.15 in federal taxes.

So $7K = $1050 in more federal taxes
Assuming further that FICA kicks in that would be an extra 7.65% = $535.50
Also assuming a 3% state income tax that would be another $210.

Total taxes = $1795.50

Who is talking about taxing benefits?

Last I heard was Candidate McCain.

Now under McCain plan you & employer would be taxed but you got a $5000 tax credit so in you hypothetical above you would come out ahead.....

Is someone actually suggesting taxing benefits w/o any tax credit?

Is so they are proposing a $2000 tax increase on the middle class. Could easily double tax burden paid while increasing taxes for the rich at a very small %.

currently both employers portion and employee portion is tax free.

If you make $50K in income and pay $5K in premiums your W-2 shows $45K in income.

is only going to apply to those making over $250,000./year.

The roadblock, besides the heavy insurance industry lobbying effort, is "whose gonna pay" for any universal or government run system. The debate is ass backwards as it considers that expenses will continue to be high and go higher rather than using the government to create competition and drive prices down. Thus taxing benefits would create the revenue to fund this new system. It also assumes that employers should continue to be the major source of providing benefits rather than creating a system that serves the person, not the employer or the insurer.

The sticky question is finding a way to pay for what is sure to be high front-loaded expenses no matter what reform takes shape. Be it building a brand new government agency to expanding existing ones...the money has to come from somewhere...especially in light of all the billions being used to bail out the economy. How do you pay for the changes? I honestly don't have a snap answer and this has to be addressed if any reform will pass...especially one with a universal or single payer option.

individual health plans are exactly that - maybe for family too. Howvever - with single payer you're also contributing to healthcare for those unable to pay or exempt from paying i.e. children from conception though to school leaving age, the unemployed and those past retirement age. Hence the name "universal"

If a tax increase will get us to a single-payer solution, I'm for it.

Adding taxes on top of the current insurance/co-pay managed crap? No, it's just another expense with no gain.

:hi: