Republican senators are reportedly discussing a possible tax on employer-sponsored health insurance plans in order to stabilize the public health insurance market, a move that would affect the more than 177 million employees who get their health insurance through work.

Several GOP senators are open to the move, according to a report in The Wall Street Journal, which broke the story.

Currently, health benefits aren’t subject to income or payroll taxes. However, the current tax-favored status of employer-provided insurance cost the federal government more than $250 billion in fiscal 2016, according to the CBO.

Bloomberg/file photo

The idea of taxing workplace health coverage has come up before. House Republicans considered taxing employer plans as they drafted up their Affordable Care Act replacement, the American Health Care Act. But GOP representatives never moved forward after meeting resistance from business groups.

And Senate Republicans will probably meet the same resistance.

Taxation of benefits has always been a top concern,” Joel Wood, SVP of government affairs at the Council of Insurance Agents & Brokers, said last month when talking about the Senate’s healthcare overhaul efforts. CIAB is an industry trade group.

“I’m not saying we feel naked, but we feel vulnerable. All we are trying to do is keep that drumbeat going on whatever Congress decides to do to resolve issues associated with exchanges, high risk pools, Medicaid. [We want to ensure that Congress does not] solve those problems at the expense of the employer-provided system,” he said.

Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access