Since its inception, employer-provided coverage has given American workers and their families peace of mind by offering affordable and robust health care coverage. The success and stability of the U.S. health care system is in large part thanks to what’s known as the income tax exclusion for employer-provided coverage.
By allowing employees to exclude employer-provided coverage premiums from their taxable income and allowing employers who provide health coverage for their workers to deduct these expenses from their tax liability, employers are not only incentivized to offer high-quality plans that meet the needs of their workforce but also keep it affordable.
Periodically, there are calls to eliminate or cap this policy. Doing so would upend a bedrock of the way heath care is delivered to the roughly 180 million Americans who rely on employer-provided coverage. It would also undermine the efficiency of a system that has worked for 75 years, jeopardizing the affordability and accessibility of health coverage for families across the nation.
Some of the consequences would include higher taxes and higher health care costs for middle-class Americans who would be forced to divert their own income to cover increased premiums, deductibles, and out-of-pocket costs. Changes to the current tax treatment of these plans would also stifle innovation and diminish the quality of plans offered.
The current tax treatment of employer-provided health care has created a reliable system that gives employers the ability to offer affordable, responsive coverage to employees and their families. And for decades, it’s worked. Altering the tax status for employers and employees could represent a tax increase on American businesses and hardworking taxpayers. As it stands, workplace health care provides a significant return on investment for businesses and is a strong recruitment and retainment tool. American workers also place tremendous value on their workplace health benefits.
Earlier this year, PACT joined more than 70 organizations urging Congress to keep employer-provided coverage tax-free. Congress should consider policies that not only maintain but also strengthen the integrity of employer-provided coverage to further enhance its affordability and accessibility. By empowering employers to offer high-quality coverage, we can better protect the health and well-being of countless Americans and their families.
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The Protecting Americans' Coverage Together campaign is a coalition that includes the U.S Chamber of Commerce, Business Roundtable, Vermeer Corporation, the National Association of Manufacturers and Council for Affordable Health Coverage. PACT represents leading employer voices focused on strengthening employer-provided coverage and protecting the benefits that American families depend on for their health.
