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Beginning in 2011, you'll be taxed on employer-paid health insurance

Discussion in 'US Health Care Reform' started by Brensdad, Jun 17, 2010.

  1. Brensdad

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    Starting in 2011-next year-the W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are provided. If you have group health, and your employer pays say $12,000 per year toward your insurance, beginning next year you'll be taxed on it. Taxed on money you'll never, ever see.

    It doesn't matter if you're retired; your gross income WILL go up by the amount of insurance your employer paid for. So you'll be required to pay taxes on a larger sum of money that you actually received; take the tax form you just finished and see what $15,000.00 or $20,000.00 additional gross income does to your tax debt. That's what you'll pay next year. For many it puts you into a much higher bracket. This is how the government is going to buy insurance for fifteen (15) percent that don't have insurance and it's only part of the tax increases, but it's not really a "tax increase" as such, it's a redefinition of your taxable income.

    From the bill itself:

    Title IX Revenue Provisions-Subtitle A: Revenue Offset

    "(Sec. 9002) Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employee's gross income (excluding the value of contributions to flexible spending arrangements)."
     
  2. KRenee

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    Thanks, I hadn't heard this before. Just the beginning of the nasty surprises, I suspect.
     
  3. sarahspins

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    Wow, that definitely puts us up in the next bracket :(
     
  4. Pete

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    The value of your health insurance will not be taxable in 2011. It will be listed on your w-2 for informational purposes only! The " cadillac plan " tax goes into effect in 2018. This 2011 tax has been widely reported and debunked on many news sites. Pete
     
  5. swellman

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    Please, brensdad, confirm or deny that the information you posted is, at the very least, misleading. I provide evidence that what you posted is rhetoric. Seriously, do you believe every piece of chain mail rhetoric that falls into your In Box? Do you bother checking for yourself?




    http://www.politifact.com/truth-o-m...tax-forms-hr-3590-health-insurance-pay-taxes/

    Claim: Starting in 2011, "you will be required to pay taxes" on "the value of whatever health insurance you are given by the company."

    Answer: Got that? "Not considered taxable income."

    A new chain e-mail makes the claim that most people, even retirees, will see big tax increases next year thanks to President Barack Obama's new health care law, because it will start taxing health insurance as regular income.




    http://www.snopes.com/politics/taxes/hr3590.asp

    In general, beginning in 2018 (not 2011), H.R. 3590 imposes a 40% excise tax on the value of employer-sponsored medical insurance that exceeds a given threshold (initially $27,500 annually). Although "the aggregate cost of applicable employer sponsored group health coverage" will be reported on employees' W-2 forms, the excise tax would be paid by the insurance company, not the employee, and is initially expected to affect fewer that 10% of families covered by health insurance"

     
  6. hawkeyegirl

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    PM me if you would like the e-mail address of a Nigerian prince who needs your help in transferring a large sum of money to his account in the States. He'll go halvies on it with you. ;)
     
  7. owensmom

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    roflmao!!!!!
     
  8. MamaC

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    Or if you need the address of The Widow Arafat, from whom I received a VERY PERSONAL email last week.
     
  9. Brensdad

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    OH! How could I have been so stupid? The insurance company pays the tax, not the consumer! How could I have been such a fool? Lord knows those insurance companies will just eat that tax right up and not raise rates and pass them right along to consumers! Silly me.

    Please forgive my error, this did come from a friend whom I normally consider reliable enough that I didn't check his source.

    I guess I could have called one of the Democrats that voted for it, but they didn't read it either, so how would they know?
     
  10. Flutterby

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    Actually, they won't be able to increase rates as they wish, like they can now. They will have to state what they make as a profit, what they spend, what their over head is, and they'll only be able to charge no more than a specific % (I can not remember what that % is at the moment) OVER their profit amount.

    So they can't hike the price to whatever they want.
     
  11. swellman

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    Well? Answer the question.

    To be so business oriented, perhaps even have an MBA or equivalent in experience, one would think you should know this wouldn't place people in a higher tax bracket.

    May I please assume this is true for all your other pablum filled tirades? I would feel better.

    Dude, you were caught re-spewing crap from a rhetoric filled, politically motivated and debunked email message. You were asked to confirm or deny your claims - don't blame it on a friend as he didn't post it. You did neither. You stated people's income would increase and they would be placed into another tax bracket. Fail. You claimed that retirees would have to pay more in taxes - throwing out "retirees" is obvious fear-mongering. Fail. It was so full of fail I nominate it for "Epic Fail"

    You never admitted that it was all crap.

    I take it by your failure to admit it you are embarrassed. This is a good sign as, perhaps, you will take the time to filter and evaluate the garbage you read and hear every day for accuracy.
     
  12. Brensdad

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    Yep. I am embarrassed for posting something that I did not check. Typically I do.

    In fairness, throughout the healthcare debate and into the oil spill, I have posted sources to back up my claims. In this one, I failed to do so and was burned for it, and I will own up to it. I have not found this to be true of claims I have made with data or evidence to back it up. Given the behind closed doors nature of the bill, and the fact that even the speaker said she wouldn't know what was in it until it passed probably should buy me a little room for error.
     
  13. Darryl

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    Starting last year, employers also had to report non-taxable IRA company contributions on the W2. Just as with the upcoming health care reporting, it did not make IRA contributions taxable, it simply gave the IRS a way to correlate the employer's total payroll to items that are taxable vs. non-taxable on each employee's personal tax return.

    As far as I can see in the law, the same will be true of health care expense reporting. The government needs to know how much employers are paying on behalf of their employees in order to insure that the provisions of the new law are adhered to (i.e., employers paying the required share of employee's health insurance, and doing so in a non-discriminatory manner), as well as insuring that employers receive the proper credit under the new law for providing health insurance for their employees.

    As an employer, I can see that this reporting is a good thing.
     
  14. Scribe

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    darryl is correct.

    but, as someone who was in the senate finance committee when this was debated at 1 am, there's one additional part that's important.

    if health insurance costs are published people will know how much it costs and (hopefully, lawmakers say) they will agitate for more competition and choice. who knows if that'll be the case but the logic seems sound.

    it's absolutely true that right now almost no one knows what their health insurance actually costs. now it will be itemized so you will have a cold, hard (and probably very large) number right in front of you. i know i don't know exactly how much my health care insurance cost.

    now ... let's move away from conspiracy theories and talk about real issues ... say, death panels. (i'm joking.)
     
  15. chbarnes

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    My partners and I recognized a few years ago that our employees didn't know the full value of their compensation. So we give each employee a yearly report that includes the value of health insurance, retirement benefits, etc. For many, it's an eye-opener.

    Chuck
     
  16. Lisa P.

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    I've had people amazed at how expensive insurance can be, because they were paying $300 a month for insurance and now are paying $1200 a month. Never seems to quite register that someone has been paying the $900 difference for them, usually for years.
     
  17. Mom2rh

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    As someone who has to pay for my own insurance with after tax dollars...so what? Why shouldn't employees have to pay taxes on health insurance as income?
     
  18. Lisa P.

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    I may not understand you, I'm not so hot with taxes, but I think families with individual medical insurance should be able to deduct their premiums while itemizing for their federal income taxes. State taxes will probably vary. I'm guessing that if they include insurance benefits at some point as taxable income (which I'm reading from above is not the case) then the itemized deduction for insurance premiums will also be removed?
     
  19. Mom2rh

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    Good question and I should know the answer but I don't. I think you can only deduct a portion of your medical expenses if they are a certain percentage of your income. So it's not a given that everyone can take that deduction.

    But taking an itemized deduction is not nearly as beneficial as getting it free and clear. No matter how you look at it.
     
  20. hawkeyegirl

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    You can deduct medical expenses that are greater than 7.5% of adjusted gross income.
     

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