The Bush administration says the deduction for employer-sponsored health coverage could cost the federal government about $168 billion in fiscal year 2009, up 11% from the 2008 total.
The Office of Management Budget, an arm of the White House, has included those figures in an analysis that accompanies the release of the administration’s 2009 budget proposal.
Fiscal year 2009 will start Oct. 1.
Congressional committees are preparing to start a round of hearings on the budget proposal, and the final budgets are usually substantially different from the proposed budgets.
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The administration has brought back proposals from earlier years to create a new set of savings accounts – the lifetime savings account, the retirement savings account and the employee retirement savings account – that would replace the current collection of tax-advantaged accounts.
Insurance industry groups have argued that none of the proposed accounts would offer the kinds of incentives and penalties that the existing accounts, and products such as life insurance policies and annuities, now use to encourage consumers to leave money in their nest eggs until they retire.