COMPARE AND CONTRAST
Posted On: Jan. 28, 2007 12:00 AM CSTHow President Bush would change the taxation of health care coverage
Current law
- Employees not taxed on the cost of group health care premiums paid by employers
- Individuals who buy their own health insurance coverage and who itemize their tax deductions allowed to deduct premiums and other out-of-pocket costs that exceed 7.5% of adjusted gross income
- Contributions paid to health savings accounts tax-deductible
- Pretax contributions allowed to health care flexible spending accounts
Bush plan
- Everyone covered by a health plan entitled to a tax deduction of $15,000 for family coverage and $7,500 for individual coverage
- Employer-paid health insurance premiums become taxable income for the employee
- Annual premiums less than $7,500 for individuals and $15,000 for families not subject to income or payroll taxes
- FSA pretax contributions eliminated
- HSA contributions retain tax-favored status