President Trump is introducing his Republican proposal for healthcare reform. What does it mean for you? Preliminary reports show some good and bad sides to the Republican proposal. Below is a listing of the main features of the legislation:
- Elimination of individual mandate (no more fines for not having coverage)
- Elimination of subsidies
- Elimination of all the laws taxes
- Tax credits offered based on age, not income (everyone would be eligible for a $2000 or $4000 credit)
- Ending Medicaid expansion and giving states back control
- Providing money for states to establish high risk pools to provide coverage for people with pre-existing conditions
So how does the government pay for this plan? One of the scary topics being discussed by Paul Ryan and others is the concept of limiting the tax deductibility of group health insurance.
Currently the employer and employee contribution to health insurance is a tax deduction for both parties. Employee benefits are the second biggest cost for employers after payroll. If employers lose the ability to deduct this expense it will have a huge impact to their bottom line. In addition, employees now have the ability to have a pre-tax payroll deduction for their share of premiums as well. If both these deductions are removed it will be a huge middle class tax increase equaling somewhere between $1,800-$3,500/year.
If this does get voted down as part of the new healthcare legislation, it still may reappear when Trump-promised comprehensive tax reform is on the agenda.