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Limiting Tax Exclusion for Employer-Sponsored Health Insurance Still Being Discussed

From the National Business Coalition on Health: Capping the tax exemption for employer-sponsored health coverage would raise hundreds of billions of dollars over the next decade, according to new analysis by the Urban Institute

As the single largest tax expenditure, the employer-sponsored insurance exclusion massively reduces the tax revenues the government collects each year — by a total of $268 billion in 2011. Placing a cap on the exemption that allows the top 25 percent of the most expensive health benefits to be taxed would raise $264 billion for the federal government by 2023. 

A cap on the exemption for employer-sponsored health care has started to come up for discussion frequently as Congress looks toward a broad tax reform in 2014. The cap analyzed by the Urban Institute would lead to a tax increase for 16 percent of people who file taxes in 2014 and 20 percent of people who file taxes in 2023.

See related post on CBO projections showing significant decreases in tax revenues expected from the "Cadillac Tax". I imagine capping the tax exemption for employer-sponsored health coverage will continue to be a strong possibility.

Posted by Cristie Travis at 7:25 AM

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