Kaiser: Health insurance tax breaks favor high-income workers

Higher-income workers are the receipients of the largest tax subsidy for employer-sponsored health coverage, according to a research brief from the Kaiser Family Foundation. That’s because the value of employer-sponsored health benefits is excluded from taxable income and higher-income workers are taxed at a higher marginal rate (Source: “Issue Brief Examines Tax Implications Of Employer-Sponsored Health Coverage,” Kaiser Family Foundation, July 10, 2008).

The federal government loses more than $200 billion a year because of tax code provisions that provide subsidies for employer-sponsored coverage amounts, according to Kaiser. The Kaiser brief examines how the tax code affects tax payers depending on whether they have health coverage, and whether that coverage is employer sponsored. The research also concludes that the tax deductions self-employed workers receive to offset the cost of premiums are less generous than those offered for employer-sponsored coverage.