For three generations, since the end of the Second World War, most Americans have gotten their health insurance through their employers. Federal tax subsidies for employers have helped create and sustain this situation. Some in Washington would like to see this situation change. Specifically, they want to reduce or even eliminate subsidies to employer healthcare plans.
This idea was brought up less than a year ago, during the debate over healthcare reform, but under pressure from labor unions, the issue was dropped. Now with the power shift of the elections and with a new focus on the deficit, the subsidies are again finding themselves potentially on the chopping block.
Organized labor is still opposed to any reductions to employer healthcare, arguing they strike a hard blow to the middle class. Supporters of the reductions not only argue for reducing the deficit, they frame the idea as a way to transform Americans into frugal shoppers for healthcare.
New healthcare exchanges included in the recently passed healthcare reform act, which go into full effect in 2014, are designed to increase the ability of Americans to shop intelligently for healthcare. Some see these as the element to the equation that could make the subsidy reductions work.
Supporters further argue that employer who did not provide healthcare might pay higher salaries.
For more information, or for other tax issues, please contact the Illinois tax attorneys at Horowitz & Weinstein.