Senate Panel Stiffens Employer Fees in Health Care Reform Bill

By Staff Report

Oct. 2, 2009

Employers that do not provide health insurance or provide coverage that is not considered affordable would lose a tax break under an amendment to a health care reform bill approved by the Senate Finance Committee.

Under the reform measure put together by Finance Committee Chairman Max Baucus, D-Montana, employers not offering health insurance would be assessed a fee to partially offset premium subsidies provided to lower-income employees who purchase coverage through state insurance exchanges that would be set up under the bill.

The fees—based on the cost of those subsidies and subject to an annual cap of $400 times the total number of a company’s employees—also would apply if the premium charged by an employer exceeds 10 percent of an employee’s income and the employee obtains coverage through an exchange. The fees would apply only to employers with more than 50 employees.

Under an amendment proposed by Sen. Bill Nelson, D-Florida, and approved Wednesday, September 30, by the Senate committee on a 14-9 vote, employers would not be allowed to take a tax deduction for those fees.

Revenue generated by eliminating the tax deduction for such fees would be used to offset revenue lost from another change included in Nelson’s amendment—individual tax deductions for medical expenses.

Baucus’ proposal would allow individuals to deduct medical expenses only if they exceed 10 percent of a taxpayer’s adjusted gross income, up from the current threshold of 7.5 percent. Under the Nelson amendment, the 7.5 percent threshold would continue for taxpayers age 65 and older, while the 10 percent threshold would apply for everyone else.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail

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