Thursday, January 25, 2007

Write to Your Congressional Representative

If you are in a position that resembles mine and Lindsey's in any way, the rising cost of health care, and specifically, health insurance is really becoming an issue to you on a very real and personal level.

In his State of the Union Address on Tuesday night, President Bush spoke of a proposal to give Americans a tax break to help with the burden.

Details are available at the White House website.

Under The President's Proposal, Families With Health Insurance Will Not Pay Income Or Payroll Taxes On The First $15,000 In Compensation And Singles Will Not Pay Income Or Payroll Taxes On The First $7,500.

At the same time, health insurance would be considered taxable income. This is a change for those who now have health insurance through their jobs.

The President's proposal will result in lower taxes for about 80 percent of employer-provided policies.

Those with more generous policies (20 percent) will have the option to adjust their compensation to have lower premiums and higher wages to offset the tax change.

Essentially, if your premiums are paid by your employer, you will have to recognize that as income, but then you get the deduction to offset it. As long as your premiums don't exceed the amount of the deduction, you will receive a benefit. I'm not sure how they plan to address the issue of individuals who are considered high risk by the insurance company and whose premiums exceed the deduction amount. We'll have to wait for final legislation to see if they fix that. **

If you've been paying 100% of your own health insurance premiums all along, you have everything to gain.

Anyway, right now this is just a proposal by the President. If this is a deduction you believe would be beneficial (which of course, I do) please take the time to let your Congressional representative know that you would like for them to support whatever bill is drafted to propose it. Hopefully we can follow the progress of the bill when it is introduced, and see if Congress takes a good idea and screws it up, or gets it right and helps to lighten the load of the average American citizen.

** UPDATE - Upon reading more closely, the proposed solution for someone whose premiums exceed their deduction, the President's seems to recommend adjusting your coverage down and your wages up in order to take full advantage of the deduction. I assume the theory is if your wages are higher you have more money in the first place and so the tax break isn't needed as badly.