Thursday - June 02, 2005

Social Security Reform, Part XXIV

President Bush’s health care agenda is introduced in the House and Senate.  Individuals would be able to deduct the cost of HSA insurance.  Senator John Kerry (D-MA) fought this because Group Employee Health Insurance would lose market share to individual insurance companies.  Another part of this legislation would give a refundable tax credit to small employers, under 100 employees, for employer deposits in employees’ HSAs.  But the employee must be on a Group Employee HSA Plan.  So this is discrimination against employees who have individual HSA insurance.  President Bush never demanded that clause.

But most importantly this legislation has a refundable tax credit for the poor to purchase HSA insurance.  Here the dynamics go crazy.  Large Group Health insurance companies know that employees are not going to pay $400 a month to add their families onto their employer’s plan if they can get HSA insurance for practically free from the government.  So young healthy people leave the Employee Plan and old sick people remain.  Employee Group Health Insurance plans would be in more trouble.  Like President Bush said, “Own your home, own your health insurance and own a piece of your retirement.”

On May 9, Senator Rick Santorum (R-PA) and Representatives Sam Johnson (R-TX), Eric Cantor (R-VA), Paul Ryan (R-WI), and J.D. Hayworth (R-AZ) introduced bills S. 978 and H.R. 1872, the Healthcare Tax Relief for the Uninsured Act of 2005, to enact into law key elements of President George W. Bush’s health care agenda.

According to a summary on Ryan’s Web site, the bills would implement three new programs to make insurance more affordable:

Premium deductibility. An individual who purchases a high-deductible health plan (HDHP) combined with a health savings account (HSA) and does not receive health insurance through an employer or government program would be allowed to deduct from his or her taxable income the amount of the premium.

Small business tax credit. Small businesses of up to 100 employees would receive a refundable tax credit for contributions they make to their employees’ health savings accounts (up to $200 for a contribution into an individual HSA or $500 for a family HSA). In order to be eligible for the credit, the employer must offer a group high-deductible health plan.

Low-income tax credit for the purchase of health insurance. In order to help low-income people get coverage, the legislation provides a subsidy of up to 90 percent of the cost of their health insurance premiums--up to $1,000 for an individual or $3,000 for a family plan. The credit would be refundable, advanceable, and assignable, meaning the money could go directly to the insurer chosen by the low-income insured.

For more information ...

The Senate version of the Healthcare Tax Relief for the Uninsured Act of 2005 is available online at:
http://thomas.loc.gov/cgi-bin/query/z?c109:S.978:.

To download the House version, go to:
http://thomas.loc.gov/cgi-bin/bdquery/D?d109:13:./temp/~bdG2oC::.

Posted by Z Woof     on 06/02/2005 at 10:31 AM   
Filed Under: • Social-Security •  
• Comments (8) • Trackbacks(0)  Permalink •  

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