It’s the issue that just won’t die, but believe it or not, some in Congress are yet again proposing the taxation of employer-provided health benefits to raise revenue for other “priorities.” IAFF members have fought time and again to quash this bad idea – we were successful in stripping it from healthcare reform, and more recently helped defeat its consideration as part of a comprehensive tax rewrite. Nonetheless, the fight continues.
Opponents of the exclusion have decided to wage this fight on two fronts, through new legislation that would repeal the Affordable Care Act, and as a policy proposal that would limit the exclusion to help pay physicians reimbursed through Medicare.
This past week, three Senators unveiled a health care plan that is being widely touted as the first comprehensive Republican alternative to the Affordable Care Act. Although the Patient Choice, Affordability, Responsibility and Empowerment Act, sponsored by Senators Orrin Hatch (R-UT), Tom Coburn (R-OK) and Richard Burr (R-NC) is still just a general mixture of priorities, principals and some specific legislative language, one thing we do know is who will be picking up the tab to fund this new idea – fire fighters. The proposal is paid for by significantly reducing the tax exclusion for employer-provided health coverage, capping the employer’s exclusion at 65 percent of an average plan’s cost. Under this framework, individuals will be taxed on the amount of their employer-provided health that exceeds 65 percent of the average health plan. Since IAFF members tend to have more expensive health care than many other workers, the proposal will increase their tax burden by thousands of dollars per year!
A less publicized but potentially more serious attack on the health care exclusion has been suggested in a Senate Finance committee memo. The memo proposes the exclusion as a means to help pay for future Medicare payments to physicians. Unlike the aforementioned Patient Choice Act, legislation reforming Medicare payments to physicians is being seriously considered by Congress. Clearly, taxing the health benefits of fire fighters is a very real fight still being waged on Capitol Hill – a fight from which the IAFF and its members will not back down.