Ryan GOP plan would remove the tax exemp for employee health care- benefits as taxable income

[riversedge]

It gets worse everytime read something about ACA



http://www.rawstory.com/2017/01/gop-plan-to-replace-obamacare-gives-big-tax-break-to-the-rich-while-sticking-it-to-low-earners/


GOP plan to replace Obamacare gives big tax break to the rich while sticking it to low earners

09 Jan 2017 at 10:32 ET



U.S. House Speaker Paul Ryan makes a statement to the media on Capitol Hill in Washington ruling himself out as a potential 2016 presidential candidate April 12, 2016. (REUTERS/Yuri Gripas)






.....................A Republican plan to replace President Barack Obama’s health care reform law would turn employee health benefits into taxable income and shift more tax savings to high earners.

In a report over the weekend, congressional correspondent Jamie Dupree revealed that buried within an Obamacare replacement bill proposed by the Republican Study Committee in the House is a provision that would create a standard deduction for health insurance (SDHI) of $7,500 for individuals and $20,500 for families.
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The value of the proposed deduction in the AHCRA would be inversely related to income, as all deductions are. A millionaire in the 39.6 percent tax bracket would receive almost $3,000 in income tax reductions for purchasing individual coverage and over $8,000 for purchasing family coverage. An individual in the 15 percent bracket would receive a maximum of $1,125 in tax reduction for an individual or $3,075 for a family. An individual without earned income would get no help at all. All individuals who had income subject to payroll tax would additionally receive a reduction in their payroll taxes (The payroll tax reductions would presumably reduce the funding of the Medicare and Social Security trust funds.)

Most individuals with low incomes would not be able to afford coverage with this level of assistance. Moreover, low-income individuals would not have the capital to pay premiums for health insurance until they realized the deduction at tax filing time. Finally, they would get no help with cost sharing unless they had enough money to save through an HSA.....................more .....

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[truebluegreen]

1. When your opponents are committing political suicide, let them

(especially when there is no way to stop them, only to publicize what they are doing). The only way forward is through.

[Hoyt]

2. Whoever wrote that article in RawStory really doesn't understand the proposal.

First the Standard Deduction of $7500/$20,500 is not meant to be a subsidy like that under the ACA for people who can't afford health insurance. That's a totally separate matter, that hopefully the GOPers will find it in their hearts to fund for people who really can't afford health insurance.

I get that a $7500 deduction is worth more to the wealthy than low income people. But that is true right now. A lowly paid clerk gets less value out of health insurance being excluded form taxable income than a well paid manager. Under this proposal, a rich CEO -- who wants the most expensive coverage -- is going to lose a big tax savings (the ACA does phase out income tax savings on so-called "Cadillac plans."

Second, by taxing the health insurance as income, and offering a relatively low standard deduction, they are trying to encourage people who can afford or want better health coverage from getting it at taxpayer expense. I understand doubting these GOPer cheats, but one of things Sanders and others have opposed are the so-called Cadillac plans that go untaxed. If you only get a $7500 standard deduction, you are less likely to buy/want a plan that is going to get taxed on anything above $7500. Not sure $7500 is the proper level.

Third, and perhaps most important, millions of people with the money to buy health insurance do not have access through their employer -- plumbers, solo-attorneys, construction workers, consultants, contract workers, etc., who are part of the "gig economy" don't get the favorable tax deduction that a corporation does unless they do some fancy structuring and tax reporting. This proposal simplifies that and gives those people the same tax benefit as corporate employees.

Also, it begins to uncouple heath insurance from employment. That is also something Sanders and others have supported.

Of course, even if the above is right, Ryan and his buddies can royally screw everyone at the last minute.

[VMA131Marine]

3. Seems to me ...

this also eliminates the corporate tax break for employers paying for all or part of an employees health insurance. This will encourage the demise of employer based health coverage and don't expect employers to increase your pay by the amount they were paying toward your health insurance. Then, if insurers can go back to denying coverage to people with pre-existing conditions, there are people who won't be able to buy insurance at any price.