Tax My Benefits? The Devil in the Details

May 16, 2009

Taxing everyone’s health care benefits seems to be a back in vogue.  But it is also a reality for some right now.  One of those situations can help us understand the real implications of taxing health care benefits.

Small Businesses

Many small businesses are acutely aware of the inequity in the tax code when it comes to health care.  A small business that files as an individual entrepreneur, files an individual return.  Like you and me, he or she must meet the 7% test.  Only health care costs that exceed 7% of adjusted gross income are exempt from taxation.  For most people with decent employer sponsored health care, that’s a tough threshold to meet.

For small businesses, it means that the they are paying taxes on the 7% of their income that they pay for health care.

But there is another even more relevant example of wage earners who pay taxes on their benefits. Read the rest of this entry »


Administrative Simplification

November 8, 2008

Sometimes people are magically teleported outside of their health care silo.

This happened to a group of our participants every month for several consecutive months.
At the beginning of each month one of the members of this group would call our office – “The doctor won’t treat me because he/she was told I have no health insurance.”
Our Plan had recently approved coverage for domestic partners.    Somehow, the computer system of one of our carriers could not properly interpret the code for a domestic partner.    The computer saw this adult as a child.   Read the rest of this entry »