This Just In...
Workers have mixed opinions on how they want to receive health insurance, according to an analysis by the Employee Benefit Research Institute (EBRI) earlier this year. About equal percentages of workers want their employer to continue to select and pay for their coverage, versus just paying for their coverage (40 and 41 percent, respectively). The remaining 19 percent would prefer their employer to give them money and decide how they want to spend it themselves.
Employers’ payments for health insurance are a form of compensation, but unlike cash compensation, they are exempt from income and payroll taxes. In most cases, workers’ contributions toward their coverage are also excluded from income and payroll taxes. That favorable tax treatment costs the federal government about $250 billion in forgone revenues each year.
Some lawmakers have suggested eliminating tax-preferred treatment of employer-provided benefits as part of a budget overhaul. If that happens (and we aren’t holding our breath), small employers would have to decide whether to continue offering benefits. Barring repeal of the Affordable Care Act ’s employer mandate, large employers would still have to provide health benefits.
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