Legislation would stop tax penalty on health insurance
By Congresswoman Kay Granger
When my children were young they went through the usual colds, flu, tubes in their ears, and stomach viruses.
Then from time to time there was a real scare, necessitating tests and serious doctor consultations. Fortunately, I was always working at a job that afforded health-care insurance for them and for me.
Then my mother had a stroke, and I moved her in to live with me. This time her health struggles also came with struggles with her insurance coverage as her health declined.
Today, many families face the same health struggles, but the insurance that helps the family meet those struggles is not there.
This week is National Cover the Uninsured Week – a campaign to highlight the need for a comprehensive plan to cover the millions of uninsured and underinsured Americans.
Nearly 47 million Americans under the age of 65 lack health insurance coverage, an increase of over two million from the prior year. This is despite the fact that one out of every six dollars in the U.S. economy is spent on health care.
The health care system in this country needs a lot of improvement. The goal is affordable, accessible and hassle-free health care for all – but not a one-size-fits-all, Washington-run health care system.
The number of uninsured Americans has been steadily increasing for years, but the profile of the uninsured has remained largely the same. More than eight in 10 of the uninsured come from working families. More than 70 percent are from families with more than one or more full-time workers. Employer-sponsored health insurance is not an option for the large majority of uninsured employees – 70 percent work where health benefits are not offered.
Not only do many employers not offer health insurance, but also the current tax code penalizes individuals who buy their insurance outside the workplace.
The federal government effectively subsidizes employer-provided health insurance to the tune of more than $100 billion a year. By contrast, individuals who purchase their own health insurance outside the employer system get virtually no tax relief. They must buy insurance with after-tax dollars, putting many in the position of having to earn twice as much income before taxes in order to purchase the same insurance. This hidden health tax penalty effectively punishes people who try to buy their insurance outside the workplace.
That’s why I have introduced the Affordable Health Care Expansion Act (H.R. 5784), which will eliminate the tax code discrimination against people who do not get health insurance from an employer. The Affordable Health Care Expansion Act creates a new tax credit for the purchase of private health insurance. The pre-payable, refundable tax credit would be available to all Americans regardless of their employer or employment status.
A "refundable" tax credit means that the individual gets the full value of the tax credit regardless of the tax liability. If they owed $0 in federal taxes, they would still get the full $3,000 tax credit back as a refund.
"Pre-payable" means the individual is eligible for the credit at the time of purchase. The annual credit would be advanced monthly to be applied to the amount of premium owed for that month. For many low-income people, waiting until the following April for a big refund is not an option. They need the assistance now.
By making the refundable credit pre-payable, an individual purchasing coverage can simply assign the value of their credit to the insurance company and then the insurer can charge them the difference, if any.
Fifty-two percent of those without health insurance say they don’t have it because they can’t afford it. The Affordable Health Care Expansion Act will help these individuals and families afford the health care they need. Some experts think that this proposal could reduce the number of uninsured by at least 50 percent.
I support efforts to increase patients’ health care choices and believe in empowering doctors and patients with health care decisions – not lawyers and bureaucrats. If we are going to fix our health care system, we need to find a way to make sure that every single American has access to health care in a way that is affordable, and in a system the country can afford.
Everyone should be insured, and all Americans have the right to have access to quality, affordable health care.
Congresswoman Kay Granger represents District 12, which includes Parker County.