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Workers on group health tax break: Meh

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The Employee Benefit Research Institute (EBRI) asked U.S. workers with group health coverage how they might react to the elimination of the group health tax break employers now enjoy.

Nearly two-thirds the workers said they would stick with their group coverage, and survey participants were even more likely this year than in 2011 to say they would try to stay in the same group plan option.

Paul Fronstin, an EBRI analyst, has written about workers’ views in an article on the EBRI website. 

Fronstin based the article on an analysis of results from a telephone survey of 800 U.S. workers ages 21 and older.

Some economists have talked for years about the possibility of reducing the federal budget deficit by eliminating or reducing the federal group health tax exclusion. The Patient Protection and Affordable Care Act of 2010 (PPACA) is supposed to impose an excise tax when insurers or plans issue some high-cost health coverage arrangements.

Despite reports that some employers are responding to PPACA by looking for ways to push workers into the new health insurance exchange system that PPACA is supposed to create, the percentage of workers who are confident that their employers or unions will continue to offer health coverage is only a little lower than it was last year, Fronstin said.

About 56 percent of the covered survey participants said they were extremely or very confident that their group coverage will continue to be available. That’s down slightly from 57 percent in 2011 but up from 52 percent in 2010.

About 72 percent said they would prefer to keep their current group health coverage, and 22 percent said they would rather get more taxable income. The percentage that said they would to keep their group health coverage is the same as in 2011, and the percentage who’d prefer additional taxable income is down from 24 percent in 2011.

When EBRI asked how workers would respond if group health coverage were taxable, just 9 percent they would drop coverage altogether, up from 8 percent in 2011.

The percentage who said they would shop for individual coverage fell to 21 percent, from 26 percent.

The percentage who said they would keep some type of employment-based coverage, if possible, increased to 65 percent, from 62 percent, and the percentage who said they would like to stay in the same group coverage option they have now jumped to 39 percent, from 29 percent. 

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