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Catty. Chatty. And Occasionally Trashy.

Jan 22
It's a question for the Tax Experts

I don't get it. President Bush has decided to mess around with health care (God help us all). What he's proposing isn't as important as the part I don't understand. Help me out. He's proposing a tax deduction of $7,500 for individuals and $15,000 for families on the cost of their coverage. If their coverage does not cost that much annually, they are taxed on the difference. That taxed difference amount is then used to provide health insurance coverage to some of the 47 million Americans without insurance. WTF?

Here's what I don't get: 1.) Is the deduction for the portion of the premium that I pay for my health insurance or for the total amount that my company pays? For example, if your employer pays for 50% of your health insurance premium would this new tax mean your employer would stop paying their 50% since you get a tax deduction for it...meaning your monthly premiums go up by 50% until tax deduction time?

2.) If your annual health insurance only costs you $3,000 are you still taxed on the $4,500 remaining part of that deduction? (Is that a tax on money you didn't actually see?)

3.) Would that deduction count towards just premiums or would it count towards premiums, copays, deductibles, and out-of-pocket expenses? What about non-covered expenses? Does that mean we all have to keep those receipts now?

4.) Health insurance premiums are now pre-tax deductions from your gross pay. If this were to go into effect they would be taxable, thereby reducing your net pay. Would this incentivize companies to stop offering group health coverage?

5.) Why would President Bush even think to amend the Federal Tax code by creating a new tax? He's a Republican for Chrissakes! (Albeit, a stupid one.)

Actually, I don't need to know the answer. I'll just declare this proposal DOA and move on.

PinkDome at 8:03 AM
 
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