Compliance April 23, 2008

Senate Bill Expands Health Costs Tax Breaks

April 23, 2008 (PLANSPONSOR.com) - Two U.S. Senators have proposed a bill allowing Americans to deduct health insurance premiums from their federal income taxes and take money tax free from Health Savings Accounts (HSAs) to pay health plan premiums.

Reported by

Fred Schneyer

A news release from U.S. Senator Jim DeMint (R-South Carolina) said he and Senator Jon Kyl (R-Arizona) are sponsoring the Health Care Equity Act.

Under current law, individuals without employer-sponsored health care can only deduct the cost of their health insurance if it is greater than 7.5% of their adjusted gross income.

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Workers currently pay no income taxes on employer health coverage contributions. Employees may also exclude their own portion of health insurance premiums from income taxes if they receive employer-sponsored coverage.

According to the DeMint announcement, the proposal provides individuals buying health insurance on their own with the same tax benefit as those who receive employer-sponsored coverage.

“We can make health insurance affordable for millions of Americans by ending unfairness in the tax code,” said DeMint, in the announcement. “By leveling the playing field, Americans without health insurance can purchase quality coverage and take it from job to job. Too many hardworking Americans are penalized today simply because they work for a business that doesn’t offer health coverage. This bill will help fix that and begin to reduce the number of uninsured in our country.”