Healthcare Taxes

The GOP Tax Cut Bill Could Raise Taxes on Health Savings Accounts

JM Ashby
Written by JM Ashby

Health Savings Accounts are the best thing since sliced bread, right?

Not really, but that's what Republicans spent most of the last year telling us. The unshackling of savings accounts were a cornerstone of every version of their Obamacare repeal bills. Republicans said people who have no money to save should save money for medical emergencies.

Ironically, a provision in the new House Republican tax cut bill could lead to higher taxes for people with health savings accounts by potentially tying them to Obamacare taxes.

The GOP tax bill leaves the employer [insurance] plan exemption unchanged, but the proposal would now require employers to report the value of contributions to workers' health savings accounts on W-2 tax forms. [...]

[It] could potentially boost the number of employers and workers subject to the so-called Obamacare Cadillac Tax, which effectively caps the current exemption by imposing an excise tax on high-cost health benefits. The tax is currently slated to be implemented starting in 2020.

Republicans could repeal the so-called Cadillac Tax, but their bill it its current form does not.

Why not? Well, that would change the calculus of the entire bill and push it further into the red. Congressional Republicans passed budget resolutions that create space for $1.5 trillion in deficit-financed tax cuts and their bill clocks in at about $1.4 trillion by their own estimations. Adding more tax cuts to the bill or preserving more deductions would push it outside the scope of the reconciliation process they're using to advance it.

It remains to be seen what the Congressional Budget Office (CBO) will say about the House bill, but I don't think it will be good. I expect the CBO will release a score with two wildly different numbers attached to it. There will be one score that includes so-called "dynamic scoring" or magic asterisks, and there will be another score that does not.

  • muselet

    Further proof, if such were needed, that the Rs believe in exactly one thing: cutting taxes for the wealthiest Americans. Everything else, including their totally not cynical or mad-as-a-monkey policy proposals (like health savings accounts being the answer to lack of health insurance), is just misdirection and flapdoodle.


  • MadJuana

    The “empty barrel” is the so called Republican Party. They got nothin’. My vocabulary is now filled with words I didn’t used to deploy much; words like craven, vile, venal, depraved. There are also some colorful descriptives you might recognize if you are familiar with the HBO series “Deadwood”. They’re also quite apropos, but I’m thinking such language coming from a nice old lady might be a trifle shocking to sensitive souls.

    • muselet

      “Sensitive souls”? Clearly you haven’t been paying attention to who comments here. ;^)


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