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Benefits Explained

Senate support slips on taxing employee health benefits

Posted July 8, 2009 by at 02:17PM. Comments (0)

The change of heart on funding health reform through an employee benefit tax appears to be due predominantly to a lack of voter support for the measure.

“When you go out and ask people across the country, they don’t like it,” Sen. Kent Conrad (D-N.D.) told reporters Tuesday, reports The Washington Examiner.

Conrad referenced three internal polls conducted over the 4th of July recess on the subject of taxing these benefits which produced results showing strong voter opposition “in the 70% rage.”

An existing model for the taxation of health care benefits would include only plans that are worth more than $17,000 for a family of four.

However, if public opinion derails the option to tax employee health care benefits that exceed a certain cap or marker it does not necessarily mean that health care benefits will remain untaxed.

Other options include taxing the benefits of any individual with an income over a certain threshold and those of couples whose combined income exceeds a higher prescribed threshold.  These thresholds would likely be set at $100,000 or $200,000 for singles and $200,000 or $250,000 for married couples.

The Senate plan to limit tax benefits for health insurance is projected to generate as much as $300 billion in revenue for the federal government to help manage the cost of the health care reform plan.

The Joint Committee on Taxation has said that a plan to tax singles with an income over $200,000 and married couples making more than $250,000 would result in an additional $162 billion over 10 years.

Even though President Barack Obama initially indicated that he would not support a reform bill that included a tax on employee health care benefits he has in recent weeks been explaining that it is still an option on the table. Although with the Senate apparently wary of including such a measure in the bill due to public opinion and continued opposition from unions it is still unclear whether or not the benefits will be subject to taxation and what form such a tax would take.

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