The health benefits tax has been authored and advocated by Senator Baucus who is the chairman of the influential Senate Finance Committee. Senator Baucus is suggesting that deducting taxes on the benefits is one of the best ways to make enough money to pay for health care changes that would be pleasant to all members of each party.
But first, what actually is a health benefit or health benefit insurance? Health benefit or health insurance is an insurance that is responsible for paying your medical expenses. It is, from time to time, employed more extensively to take in insurance that will cover disability or custodial needs. There are many kinds of insurance like car, death, family, etc. Getting yourself an insurance is a must these days considering the economic conditions and the fuel prices right now. These health benefits may be given by a government sponsored social insurance program or from private insurance organizations. You can get these either on a group basis or by individual clients.
The White House right now is caught in a dilemma on how to get the finances for the improvement of the health care system. The health care system is currently in need of an overhaul that’s why the senate is planning to include a new tax on a number of employer given health benefits. These go beyond the value of the basic plan given to federal employees and the existing is about $13,000 a year for a four member family. The Senate believes that the best way to perk up the system and to raise money for its overhaul is to tax employer provided benefits. In turn, an employer given plan that is worth less than said level would still be tax free whereas any benefit that exceeds it will be taxed as a standard or on ordinary income. Right now, health benefits are not taxed that’s why this is a very controversial and sensitive issue.
If the tax will be adapted it would definitely be phased in over a number of years and it would be most probably to “grandfather” in health benefits deemed as part of CBA which in turn will allow union plans to stay tax free until a new contract can be discussed and negotiated. This is Senator Max Baucus proposal. When he was asked how much money the proposal would make, he declined to answer. But there was an estimation from the Joint Committee on Taxation that by taxing employer benefits, it would make approximately about $420 billion in the next 5-10 years or so which is a large bulk of the $1 trillion or more that is almost certainly needed to expand the coverage of those individuals who are uninsured.
If the exemption would be higher for unions, it would make the tax more politically pleasant but it would just defeat its purpose, which is to raise money. It has also been said that the sums under debate stays important but they are still looking at a different money raising alternatives which include President Obama’s plan which is limiting the value of itemized deductions for those families earning more than $250,000 yearly.
The people from the senate have been continuing to discuss the proposal painstakingly and they have been thinking on how to raise money by implementing other means.