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Life Health > Health Insurance > Life Insurance Strategies

Researchers Estimate Health Tax Break Costs

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Total federal and state “tax subsidies” for employer-sponsored health coverage will average about $2,778 per worker this year.

Thomas Selden, a researcher with the federal Agency for Healthcare Research and Quality, and Bradley Gray, a researcher at CNA Corp., Alexandria, Va., have published that estimate in a study sponsored by the federal Agency for Healthcare Research and Quality.

Bush administration officials have emphasized the cost of tax exemptions for purchases of health insurance in proposals to cap employers’ federal health insurance tax exemption.

Exemptions for employers’ purchases of health coverage are costing state and federal governments about $208 billion in tax revenue this year, with federal tax breaks accounting for $185 billion of the total and state tax breaks accounting for $23 billion, the researchers estimate.

The average total tax subsidy is about $1,573 per worker with single coverage and $3,825 per worker with family coverage, the researchers report.

The average subsidy per covered worker is $3,283 at establishments where the median income is more than $23.07 per hour, and $2,268 at establishments where the median income is less than $10.43 per hour, the researchers estimate.


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