Many of our hard working citizens are denied an "equal opportunity," being denied the use of up to $200,000 to apply toward their health care needs, simply because of our present health care tax policy!
When it comes to our current health care tax policy, the debate is about political power and control, not our health care. One party wants government control and the other favors corporate control. Neither wants to control costs by restoring individual liberty and freedom of choice to our responsible citizens who earn the money that pays the full cost of health care.
But here is an option that restores liberty, a competitive marketplace, and moderates cost.
Modern day economists are in agreement that every dollar that an employer spends, that benefits the employee, has been earned by the employee, whether salaried or hourly. The cost of the earned health care benefit is excluded from ALL taxes. The FICA tax (6.2 Social Security plus 1.45 Medicare) and the employer match is not paid to the IRS. These FICA dollars, not paid to the IRS, are available for the employer to spend on the cost of the benefit program. This is called a tax exclusion! An individual tax deduction only recovers the income tax paid, never the FICA tax. Individuals, providing for their own health care, do not enjoy the monetary purchasing advantage of a tax exclusion. This tax advantage has been used to make the employer the owner of the health care policy, rather than the individual who earns the money that pays the cost.
If employment based benefit programs were capped at $12,000 for an individual, $1,836 (15.3 percent of $12,000) would be the unpaid FICA tax available for the employer to spend on the cost of the benefit plan. If health care is deemed so important by society that it is granted this tax advantage, all citizens should be permitted to apply the FICA tax on the first $12,000 of money they have earned toward their health care needs, not just those getting their benefit from their employer.
For those with no employment based benefit, the full FICA tax on the first $12,000 of earnings would be transferred into the individuals Health Financing Account, instead of sending it to the IRS. This amount would be doubled for a married couple. The individual would then be permitted to contribute any additional amount, up to the cap, and deduct it to recover the income tax. Over 50 years, for a married couple, this amounts to $183,600 from the FICA tax use alone! The HFA also eliminates the requirement that citizens spend 10% of their adjusted gross income before being able to deduct any health care expenses. This grants individuals the same tax advantage as employers and encourages individuals to make prudent health care spending decisions. Payments from this account would be limited to Section 213-D IRS approved health care expenses plus the premium cost of any insurance plan the individual may choose to purchase.
This policy does not take away benefit plan that citizens currently have nor does it create any new burden for small employers, and it circumvents the current political debate about power and control over the money. It puts health care decisions back in the hands of responsible citizens.
Grassroots citizens must demand action from their elected officials on common sense health care tax policy reform! Please contact your congressperson. A detailed explanation with accounting examples is available at drbeauchamp.wordpress.com.