The Senate’s plan to reform the nation’s health system could include a tax on employer-provided health benefits.
The plans that would be affected would be those that exceed the value of the standard plan offered to federal employees (currently about $13,000 a year for a family of four). An employer-provided plan worth less than that level would remain tax-free, while any benefit exceeding the cap would be taxed as part of an employee’s compensation.
Such a tax, if adopted, would likely be phased in over the course of several years. A higher tax threshold and exemptions for unions would make the tax more politically viable but would diminish the amount of revenue it would raise to provide coverage for the uninsured.
Last month, a congressional committee discussed repealing the tax deduction allowed for certain large medical expenses or creating a tax on flexible savings accounts and health reimbursement accounts . A more dramatic proposal — taxing half of all employer-provided health premiums -was also discussed but is unlikely to get out of committee.
Meanwhile, President Obama has suggested a limit on the value of itemized tax deductions for families earning more than $250,000 a year.
Democrats in both the House and Senate have pushed for government-sponsored insurance for people who have trouble finding coverage through an employer or individually. The idea is adamantly opposed by most Republican legislators.
