True or False.

[ImnoMensa]

Tell me about this please: Is it fact or fiction?

This can cost a lot of folks a lot of money.

Starting in 2011-next year-the W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are provided.

Title IX Revenue Provisions-Subtitle A: Revenue Offset

"(Sec. 9002) Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employee's gross income (excluding the value of contributions to flexible spending arrangements)."

It doesn't matter if you're retired; your gross income WILL go up by the amount of insurance your employer paid for. So you'll be required to pay taxes on a larger sum of money that you actually received; take the tax form you just finished and see what $15,000.00 or $20,000.00 additional gross income does to your tax debt. That's what you'll pay next year. For many it puts you into a much higher bracket. This is how the government is going to buy insurance for fifteen (15) percent that don't have insurance and it's only part of the tax increases, but it's not really a "tax increase" as such, it's a redefinition of your taxable income.
-------------------------------------------------------------------------------------------
If this is true you better get more money taken out of your check for income tax, this is going to smart and burn.

[Tilted (Premo)]

It's true that employers have to report it (starting in 2011), it's not true that it gets added to your taxable income such that your tax liability increases as a result.

EDIT: Just to be clear, this starts for tax year 2011 - not with forms sent out in 2011 for the 2010 tax year.

[Lenny]

Originally Posted by Tilted

It's true that employers have to report it (starting in 2011), it's not true that it gets added to your taxable income such that your tax liability increases as a result.

EDIT: Just to be clear, this starts for tax year 2011 - not with forms sent out in 2011 for the 2010 tax year.

The reason they'll be reporting this is not to increase your tax burden (yet). It's to let the new sheriffs in the IRS keep track who is and is not providing health insurance for their employees.

[Aerogal]

What if you are opted out (we have Tricare Prime)?

[Tilted (Premo)]

Originally Posted by Aerogal

What if you are opted out (we have Tricare Prime)?

If you opted out of receiving health care benefits from your employer as part of your compensation? Then, the value of the benefits you received would be zero, and that block on the form should be blank or show 0.

[FromTexas]

Originally Posted by Aerogal

What if you are opted out (we have Tricare Prime)?

Then you get sent to a death camp.

[Aerogal]

Originally Posted by FromTexas

Then you get sent to a death camp.

That's a given - we're both veterans and by Napalitano's definition enemies of the state.

I'm good with that.

[Larry Gude (Premo)]

Originally Posted by Tilted

It's true that employers have to report it (starting in 2011), it's not true that it gets added to your taxable income AT THIS TIME such that your tax liability increases FOR THE MOMENT as a result.

EDIT: Just to be clear, this starts for tax year 2011 - not with forms sent out in 2011 for the 2010 tax year.

edit/edit

[Tilted (Premo)]

Originally Posted by Larry Gude

edit/edit

If I'm remembering correctly, you're of the same mind as I am that such policy (i.e. imposing income tax on compensation paid in the form of health care benefits, just like we would if it was paid in cash) would be a step in the right direction? It would be one of the few things about this health care reform that was actually systemically deflationary for health care costs/expenses. I mean, it would be like saying, 'if we want to reduce health care expense - I've got an idea, we should stop creating artificial demand for and encouraging people to spend more money on health care'. I mean, the policy would actually work toward the supposed goal.

[Larry Gude (Premo)]

Originally Posted by Tilted

If I'm remembering correctly, you're of the same mind as I am that such policy (i.e. imposing income tax on compensation paid in the form of health care benefits, just like we would if it was paid in cash) would be a step in the right direction? It would be one of the few things about this health care reform that was actually systemically deflationary for health care costs/expenses. I mean, it would be like saying, 'if we want to reduce health care expense - I've got an idea, we should stop creating artificial demand for and encouraging people to spend more money on health care'. I mean, the policy would actually work toward the supposed goal.

Half way there. ELIMINATE employer provided compensation that doesn't begin and end with the words 'dollars' and 'cents'.

Therefore, any insurance YOU decide to buy WILL be done so with after tax dollars. THAT will do what we both want.

When a dollar never touches your hand, when you don't have to actually pay it out, the practical implications are profound. Witness credit cards in the hands of a 25 year old. Or a 35 year old. It ain't real.

The ENTIRE point of withholding is to Jedi mind trick people away from certain ideas about voting. Same with employer provided compensation.

This is why eliminating the mortgage interest deduction is a dumb idea coming from the (another) other direction; people are already paying the mortgage with taxed dollars.