Small businesses would be eligible for a tax credit for contributions made to
their employees' health savings accounts (HSAs), and individuals could deduct
the premium cost of their individual high-deductible health plans associated with
HSAs, under legislation recently introduced in the House and Senate.
U.S. Representative Sam Johnson (R-TX), one of the sponsors of the House bill,
said the Health Coverage for the Uninsured Act of 2005 builds on the success
of HSAs, which enable people to pay for current health expenses and save for
future qualified medical and retiree health expenses tax-free in conjunction
with a high-deductible health plan.
For a Limited Time receive a
FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with
customized information for your industry, location, and job.
Get Your Report Now!The bill would help address a long-standing barrier to affordable health insurance
by eliminating the unfair tax bias against people who purchase their own health
coverage. Under the proposal, these individuals could deduct the high-deductible
health plan premiums--whether or not they itemize deductions on their income
tax return, according to Johnson.
In addition, small businesses of up to 100 employees would receive a refundable
tax credit for contributions they make to employees' HSAs--up to $200
for an individual employee and up to $500 for a family--if the employer
also offers a group high-deductible health plan, according to Representative
Paul Ryan (R-WI), another sponsor of the bill.
The U.S. Chamber of Commerce supports the legislation. Kate Sullivan Hare,
the Chamber's executive director of health policy, said the proposal provides
"meaningful assistance for individuals without employer-sponsored health
coverage and for small businesses unable to afford other health plan options."