Research Report Capping the Tax Exclusion of Employer-Sponsored Health Insurance: Is Equity Feasible?
Stan Dorn
Display Date
Download Report
(206 KB)

Some policymakers propose capping the amount of employer-sponsored insurance that is exempt from federal income and payroll taxes. If such a cap is based on employer premiums, inequities will result. Workers could pay higher taxes if their employer is located in a high-cost area, if many co-workers are in their 50s and 60s, or if a few employees have a major illness or accident. To avoid such inequities, the cap could be based on benefit generosity, measured by actuarial value, which is the cost of expected claims if a nationally representative population received the covered benefits.
Research Areas Health and health care Taxes and budgets
Tags Health insurance Health care delivery and payment Private insurance Individual taxes Taxes and business
Policy Centers Health Policy Center