In the battle to kill the Affordable Care Act and pass the American Health Care Act, Republican lawmakers are considering imposing additional income and payroll taxes on employees and payroll taxes on employers as they try to figure out how to rein in costs.
These taxes, while not in the present version of the bill, have been in previous drafts and could be resurrected if Congress decides to bring in additional revenue. They would apply to at least a portion of health insurance premiums.
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Currently, according to Lockton, more than 177 million Americans receive health insurance through an employer, and employers pay more than $668 billion annually to insure their employees. Existing tax law allows those benefits to be provided without employers or employees paying any income or payroll taxes on them. But that may not continue to be the case, if some in government have their way.
According to some lawmakers and think tanks, taxing group health plans will drive down overall health costs by decreasing consumer demand for health care. They also think that if employers cut benefits to avoid such a tax, they'll raise wages to make up for the reduction in health benefits.
Not so, says a survey from Lockton. In fact, employees will be the ones to suffer if such a tax is passed. Not only do 88 percent of employer respondents say they would avoid increasing benefits if it meant triggering a tax on health benefits, 76 percent say they would definitely cut benefits or consider doing so to avoid triggering new taxes.
And that notion of higher wages if health insurance is taxed? Pipe dreams. Of more than 800 Lockton survey respondents, the majority say they would definitely or probably not increase wages as a result. Only 6 percent say they would increase wages to make up for a reduction in benefits.
"With health care costs steadily rising, this survey indicates that taxing employer-provided benefits would cause millions of American workers and their families to take it on the chin," Bob Reiff, president of Lockton Benefit Group, says in a statement.
Reiff adds, "They'd suffer either through a shift in healt hcare expenses, like higher deductibles and other out-of-pocket costs, or they would pay higher taxes. Taxing families on their group health insurance seems inconsistent with sound and effective policy."
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