Limiting the Tax Exclusion of Employer-Sponsored Health Insurance Premiums

Revenue Potential and Distributional Consequences

In 2011, federal tax revenues were reduced by $268 billion because of subsidized employer-sponsored health coverage — the largest federal expenditure, by far. This brief examines the impacts on the federal budget and affected individuals by switching to a premium coverage tax.

Key Findings

  • Capping the dollar amount at which coverage is tax exempt would raise hundreds of billions of dollars over the next decade by including the most expensive employer-sponsored health insurance premiums and other benefits.

  • Capping the dollar amount would also result in a tax increase for those above a 75 percentile cap on employer-sponsored health coverage.

This brief is part of the Quick Strike Series, and was authored by the Urban Institute with support from RWJF.

Infographic:

file

Featured Collection

Reform by the Numbers

This collection focuses on key issues related to national health reform, Affordable Care Act (ACA) coverage expansions, and trends in health coverage.

Browse this collection

Share this:

Share this

$264 Billion: amount in federal revenue over the next decade that could be raised by a 75th percentile ESI tax cap