Obama and Congress May Raise Taxes on Middle Class

@jonnythan Said

Combined with the social security tax increase, looks like a lot of extra taxes for middle income people.

@Corey Said

Oh, the government is going to raise taxes, again.

I am sooo surprised.

Corey.

@Leon Said

They say cutting this loophole will bring $150 billion a year in additional revenue.

@El_Tino Said

Well it is a form of compensation so it makes sense to be taxed. The fact that it isn't is basically a giveaway to the upper management with fancy, expensive plans.

That said, it's supremely stupid that health insurance is tied to your employer to begin with.

@Leon Said

One loophole they are eyeing on cutting is employee health benefit. So far, this has always been tax free for the employee. But the amount that the employer contributes may be added to taxable income, which, given the cost of healthcare, would could potentially add up to thousands to taxable income for half of all working Americans next year.

https://m.cnsnews.com/news/article/health-care-tax-hikes-2013-may-be-just-start

@El_Tino Said

Well it is a form of compensation so it makes sense to be taxed. The fact that it isn't is basically a giveaway to the upper management with fancy, expensive plans.

That said, it's supremely stupid that health insurance is tied to your employer to begin with.

@Leon Said

So you wouldn't be for any payment towards medical insurance that you make being tax deductible? Because that's all it is really.

@boobagins Said

Well, not all types of insurance are pre-tax, usually they are, but it's an employer-employee election. In fact, if you pay after tax, your premiums are deductible on your taxes if you itemize.




In some ways yes, just as different saving vehicles are tied to your employer. Lots of room for fees and abuse. But then again, I'm not complaining about my health insurance. I get superb health insurance and my employer pays 100% of it.




There are ways outside of your employer that you can make to make your contributions pre-tax. Health insurance doesn't have to go through you employer. HSA's are an example. Plus, you can deduct your premiums if you itemize on your taxes as I said earlier.

@Leon Said

Of course, and that's exactly what I was addressing. The employer based health insurance is the same thing, with the difference being that your employer makes the payment for you, rather than you doing it. Both are out of your compensation and both are tax free.

@boobagins Said

Well that depends really. My health benefits and others things are not part of my compensation AT ALL. My employer picks them up completely, they don't even hit my w-2. If I were to calculate all the extra benefits I get, I technically make a good 20K a year more.

See I don't understand how this thing could ever pass, there are too many holes and unanswered questions that it feels like this is something that is just on the table but will never pass.

But this points towards what Tino was saying. When it's the employer doing it for you, it's because the employee had to pick whatever group insurance the employer provides and many times these insurance packages SUCK! You're stuck paying for something that not only is in a certain price range that you have no control over because you, yourself aren't negotiating the rates, but you could also be paying for something that doesn't truly benefit you. By un-tying the relationship, the individual has more control over the type of health insurance they want, the price range they can afford and you have the option of shopping around which makes everything more competitive and drives prices lower. So you actually have to do some work, but I would rather do that than be stuck with a plan that essentially sucks.

I'm fortunate to work for someone that offers a great plan but there are millions of other people stuck with plans that just doesn't work for them. My sis-in-law works for a small firm that only has four employees. The boss sets up the health plan and has chosen a plan that meets HER needs but not her employees. Her deductible is $10,000. My sister can't afford that kind of deductible so she's stuck having to pay all of her medical expenses out of pocket because she can't reach the $10,000 deductible before insurance kicks in.

@Leon Said

Your employer picks it up because it is a part of you benefits package, which IS compensation for your work (in addition to your salary).

Quote:


Look at it this way: say you got the money they pay the insurance company instead, and you use it to pay for insurance, and deduct it from your taxes. It's the same charade. It's how the whole thing started - the employer just cut that middle step for you.

Quote:
If what you pay for insurance is tax deductible, then this process should be too.

@boobagins Said

Yes, but it doesn't hit my W-2. My taxable income will NOT go up as others' will. That's the point I'm trying to make.

This is the first year that the IRS required all w-2's to have the FULL cost of your health insurance on there. look at your w-2 and look at box 12. What does it say for code DD?

I don't have a code DD because this part of my benefits package does not hit my compensation.



I understand what you are saying but what the article is talking about is cutting the loophole out (I don't consider it a loophole). To make all your health insurance premiums one pays through THEIR employer taxable. You're still using an insurance that your company provides which may or may not be good.

If they close the loophole, it goes back to what tino was saying, you then get the money and can shop for your own insurance. You're not stuck with whatever insurance your employer provides. If you're happy with your employer insurance, keep it, but if you're not this is your "out."

Although this doesn't address employer matching for their health plans. :/

The argument you're making is that it's easier for the employer to deduct it than you having to do it. Yes, but it doesn't address any of the health care concerns that many people have. Also, the arrangement isn't whether your employer should or should not do it, because if they're going to cut it, your employer can still deduct it from your paychecks, it will just be after-tax. It doesn't cut the middle man out, it just changes the nature of the deductions.

If they are going to cut this benefit out from your employers, it most likely means that they'll cut the itemized deduction as well.




I'm not sure I understand this. What process?