Another health care thread.

The question is not whether the employer should get to write off the expense...that is just a wordsmith game to make it sound like the employer is getting some kind of tax break. It is an expense of the employer and the employer is paying it for business purposes. Originally Posted by Rudyard K

The employer IS getting a tax break. They aren't paying 100% of the health care their employees receive. The money they write off has to come from somwhere.

The question is should the employee be required to report it as income and pay tax on the income?

As PJ pointed out in another thread, the way to make health care equitable is to eliminate employer based health care and let employers pay that money to their employees as part of their salaries. That will never happen, but insurance companies and health care providers have failed to address the problem and there are enough people who are unhappy with the present system, that some form of health care legislation will certainly happen.

The employer IS getting a tax break. They aren't paying 100% of the health care their employees receive. The money they write off has to come from somwhere. Originally Posted by npita

Uh, it's called "Income Tax". Got it "Income"...not "Revenue". Income is revenue less expenses. I don't care whether the employer pays 100% of the cost of the employee health care, or 50%, or whatever %...the employer gets to deduct...as an expense...the portion that it pays.

You seem to be trying to wrap up the benefits that the employee recieves...i.e. employer paid health benefits that the employee might not have to report as his or her income...and assign that benefit to the employer. Regardless of whether the employee has to report employer paid beneifts on their personal returns, the employer who paid them would/should still get to deduct...as an expense...any benefits (aka business expenses) actually paid for.

To try and make it simple for you...If an employer pays $500.00 per month in health insurance for an employee...that employer gets to deduct $500.00 per month. If the employer paid that to the employee in cash, the employee would report an additional $500.00 per month in income, and the employer would still deduct $500.00 per month. But because the tax laws are as they are, the employee might not have to report that $500.00 per month in health care benefit on his or her income tax. I'm not saying that is a bad thing...or even that it is a good thing...it is just the way it is. But to imply that it is a "tax break" for employers is...well, Bullsh*t!!

Don't drink the koolaide.

Word!!

Word!! Originally Posted by discreetgent

I am sitting here squirming. Something just doesn't seem right. DG giving Rudyard the 'word'?

The employer IS getting a tax break. They aren't paying 100% of the health care their employees receive. The money they write off has to come from somwhere.

As PJ pointed out in another thread, the way to make health care equitable is to eliminate employer based health care and let employers pay that money to their employees as part of their salaries. That will never happen, but insurance companies and health care providers have failed to address the problem and there are enough people who are unhappy with the present system, that some form of health care legislation will certainly happen. Originally Posted by npita

Uh, it's called "Income Tax". Got it "Income"...not "Revenue". Income is revenue less expenses. I don't care whether the employer pays 100% of the cost of the employee health care, or 50%, or whatever %...the employer gets to deduct...as an expense...the portion that it pays.

You seem to be trying to wrap up the benefits that the employee recieves...i.e. employer paid health benefits that the employee might not have to report as his or her income...and assign that benefit to the employer. Regardless of whether the employee has to report employer paid beneifts on their personal returns, the employer who paid them would/should still get to deduct...as an expense...any benefits (aka business expenses) actually paid for.

To try and make it simple for you...If an employer pays $500.00 per month in health insurance for an employee...that employer gets to deduct $500.00 per month. If the employer paid that to the employee in cash, the employee would report an additional $500.00 per month in income, and the employer would still deduct $500.00 per month. But because the tax laws are as they are, the employee might not have to report that $500.00 per month in health care benefit on his or her income tax. I'm not saying that is a bad thing...or even that it is a good thing...it is just the way it is. But to imply that it is a "tax break" for employers is...well, Bullsh*t!!

Don't drink the koolaide. Originally Posted by Rudyard K

RK - agree. Also I note you say "might" & that is correct because some benefits & even compensation are not deductible for the employer even if they are legitimate business expenses (50% of business entertainment as just one example, non performance based salaries over $1M another). But for the most part the "regular" HC plan that is offered broadly to the employee base is deductible. [where is that corporate tax guy/poster at when you need him]

So "tax break" is not the right wording, but I think "tax advantaged" is. Employers contributing to health care is clearly tax advantaged for employers that are able to do so. (just using rough #'s for illustration purposes) If my boss has the choice of giving me a $13K healthcare program that I don't pay taxes on or a $20K raise (salary) that I do pay tax on so I can go purchase the $13k healthcare plan (if I can get it at that price), the tax advantaged status of health care saves the employer $7k. But it isn't a "tax break" for the employer.

npita. Rudyard is correct as much as it pains me to say.

The only 'benefit' to an employer is that they can attract employees by offering the health care benefits. It all started when wage controls were in place and that was a way around the law to attract top notch employees.

Where you may be confused is that large companies can get better discount from insurance cost because of the economy of scale. Smaller companies can not get the same discount and may chose therefore not to offer health care.

So "tax break" is not the right wording, but I think "tax advantaged" is. Employers contributing to health care is clearly tax advantaged for employers that are able to do so. (just using rough #'s for illustration purposes) If my boss has the choice of giving me a $13K healthcare program that I don't pay taxes on or a $20K raise (salary) that I do pay tax on so I can go purchase the $13k healthcare plan (if I can get it at that price), the tax advantaged status of health care saves the employer $7k. But it isn't a "tax break" for the employer. Originally Posted by atlcomedy

Correct amundo

So "tax break" is not the right wording, but I think "tax advantaged" is. Employers contributing to health care is clearly tax advantaged for employers that are able to do so. (just using rough #'s for illustration purposes) If my boss has the choice of giving me a $13K healthcare program that I don't pay taxes on or a $20K raise (salary) that I do pay tax on so I can go purchase the $13k healthcare plan (if I can get it at that price), the tax advantaged status of health care saves the employer $7k. But it isn't a "tax break" for the employer. Originally Posted by atlcomedy

I guess I feel a little stronger about it than that. But I cannot argue that there is a benefit to the "greater good", if that "greater good" is measured at society's level.

I employ lots of people...and a lot more than TTH's dirty dozen. And I provide health care benefits for all of them...well, all full time. There is a sharing of the costs between them and me...but I provide considerable (well more than 1/2). There are folks who work for me (I guess you would call them HR folks) that utilize the tax laws to the most advantage...cafeteria plans, medical savings accounts, life insurance benefits, etc. But at the end of the day, I have only so much of the revenue that I can allocate to employee costs. Beyond that, I've got to cut costs or raise revenues. So, I guess in your example, if we are going to allocate the $7K "tax advantage" to someone...I would allocate it to the employee. Even though I recognize, under the "greater good" theory, it helps hold my costs down, gives employees an added benefit, and as such reduces my costs to consumers. In the end, the IRS must raise that revenue from some other source to fill its coffers. I just don't like the fact that it is even hinted like this is some "employer tax swindle". If it has some stink on it (and I don't think it really does), the smell comes more from the employee benefit side than the employer benefit side.

I did ask TTH about his views regarding spending more money on married employees as opposed to single employees...at least in the providing of health care benefits. I do the same thing...but it does seem to be a "screw job" to single folks. But I'm just a lowly capitalist trying to scrape out a living the best way I can. I don't have his lofty goals of fair and balanced for all concerned. I'm curious how the "Wisdom of Soloman" deals with such issues.

I guess I feel a little stronger about it than that. But I cannot argue that there is a benefit to the "greater good", if that "greater good" is measured at society's level.

I employ lots of people...and a lot more than TTH's dirty dozen. And I provide health care benefits for all of them...well, all full time. There is a sharing of the costs between them and me...but I provide considerable (well more than 1/2). There are folks who work for me (I guess you would call them HR folks) that utilize the tax laws to the most advantage...cafeteria plans, medical savings accounts, life insurance benefits, etc. But at the end of the day, I have only so much of the revenue that I can allocate to employee costs. Beyond that, I've got to cut costs or raise revenues. So, I guess in your example, if we are going to allocate the $7K "tax advantage" to someone...I would allocate it to the employee. Even though I recognize, under the "greater good" theory, it helps hold my costs down, gives employees an added benefit, and as such reduces my costs to consumers. In the end, the IRS must raise that revenue from some other source to fill its coffers. I just don't like the fact that it is even hinted like this is some "employer tax swindle". If it has some stink on it (and I don't think it really does), the smell comes more from the employee benefit side than the employer benefit side.

I did ask TTH about his views regarding spending more money on married employees as opposed to single employees...at least in the providing of health care benefits. I do the same thing...but it does seem to be a "screw job" to single folks. But I'm just a lowly capitalist trying to scrape out a living the best way I can. I don't have his lofty goals of fair and balanced for all concerned. I'm curious how the "Wisdom of Soloman" deals with such issues. Originally Posted by Rudyard K

I don't disagree with anything you have written above. I can also appreciate your sensitivity to something even faintly smelling of an "employer tax swindle" but I think we are getting into semantics to some extent trying to allocate the "tax benefit" or "advantage" to one party (employer) vs. another (employee).

Bottomline is, as the IRS Code reads today, employer-paid healthcare is "advantaged" to somebody and in a competitve marketplace for employees it is, simply put, "good business" to offer it in many instances.

As I've stated before, I'd love to blow up the current IRS treatment so it is no longer tax advantaged and offering it as a benefit is no longer "good business," but that is not the case today.

As for TTH's Dirty Dozen, it is "good business" (given the current IRS code) for him to pay 100%. Without getting into personal info & for the sake of argument, I'll just assume he runs a small law firm of relatively highly paid professionals that value a strong health care program & appreciate the value of him providing it at its tax advantaged status. It is good business for him and his employees to do that. I have a family member that is an employee at a much larger place but is in a similar situation. The median salary/bonus is >$250k/year. It makes (business) sense for her employer to do a 100% paid HC plan and gold plated benefit program. But these shops are in the vast minority.

As RK says (& again without getting into personal info & for the sake of discussion I'll make the assumption that his business has a lot more diversity in compensation and at median is lower), "there are only so many dollars to go around." The 100% Gold Plated plan just isn't practical. Nor is it practical for the vast majority of employers.

So "tax break" is not the right wording, but I think "tax advantaged" is. Originally Posted by atlcomedy

A "tax advantage" is something you get. A "tax break" is something that creep down the street gets.

PJ I would agree with you but I'm not sure Ansley would be able to withstand the shock of my agreeing with both you and RK at all much less in the same day lol

PJ I would agree with you but I'm not sure Ansley would be able to withstand the shock of my agreeing with both you and RK at all much less in the same day lol Originally Posted by discreetgent

That would put her over the edge.

A "tax advantage" is something you get. A "tax break" is something that creep down the street gets. Originally Posted by pjorourke

rotflmao

Interesting? So, are you discriminating against singles? In other words, two people in the same position...one married with children...one single. You are obviously spending more in compensation to the married than the single. Originally Posted by Rudyard K

How do I "discriminate." None of my single employees have a partner or POSSLQ* that doesn't otherwise have health care benefits. If they did, and they were a valuable enough employee, we'd figure out a way to cover them. You pay more to cover a employee with children because there are more people who are insured, and hence more risk.

* Census Bureau-speak for Persons of Opposite Sex Sharing Living Quarters.

The way I read a lot of the responses is that several people are comfortable with the insurance they are provided through there employers albeit sometimes expensive, but generally satisfied.

I agree that there needs to be some reforms. What would be wrong with actually running a progressive approach by starting with simple fixes? (e.g., portability and/or tort reform) Or what about doing something about the current fraud in medicare and medicaid? Why restructure the entire sector all at once when it's obvious the majority are generally happy?

I would really like to know how the current Senate plan is going to work for Medicare. How is pulling out half it's funding going to fix the issues it already has? A lot of medical providers have opted out of seeing Medicare patients since the govt is slow to pay or chooses not to pay because a bureaucrat decided a procedure wasn't needed. I have a friend who is retired. When he had a private insurance plan he was seeing a general practitioner twice annually for physicals. When he retired and his Medicare kicked in, his doctor stopped seeing him because the govt wasn't paying him for preventative care, i.e., semi-annual and annual visits.

First, I see govt control over health care from a veteran's point of view. I'm a veteran with no service-connected disability. Currently, it takes three months before I can even get a consult through the VA. Second, I know a lot of Native American's (family) who are covered under a govt funded health system. Some Native American's have a saying, "do not get sick after July," simply because the govt funding is gone.

I'm too depressed to discuss it. I'm pretty sure this POS bill is going to pass. It is going to be a god awful mess. Healthcare costs will explode.