<nobr>Jun 6, 2011</nobr>

ERIC Offers Support for Tax Parity for Health Plan Beneficiaries Act

ERIC, as part of the Business Coalition for Benefits Tax Equity, wrote to House Ways and Means Committee Member Jim McDermott (D-WA), offering support for his legislation to end federal tax inequities for employer-sponsored health coverage provided to non-spouse, non-dependent beneficiaries.

A copy of the letter can be accessed by clicking the link below:
http://www.eric.org/public/resources/BusinessCoalitionLtr_taxparity0611.pdf

The Tax Parity for Health Plan Beneficiaries Act, which was introduced by Representative McDermott on June 2, would, among other things, exclude from an employee's income the value of employer-provided health insurance for an employee's domestic partner or other non-dependent, non-spouse beneficiary if such individual is an eligible beneficiary under the plan.

Under current law, the value of employer-provided health coverage attributable to an employee's non-spouse, non-dependent beneficiary is included in the taxable income of the employee and in the employee's wages for payroll tax purposes.

The coalition letter argues that an increasing number of companies have made a business decision to provide health benefits to such beneficiaries, but that federal tax law has not kept pace with corporate change in this area and imposes an unfair tax penalty.

The letter notes that, as of March 2011, nearly 60% of Fortune 500 companies were offering domestic partner health coverage, and that this coverage helps corporations attract and retain qualified employees and provides employees with health security on an equitable basis.

Moreover, the letter argues that the current tax regime places significant administrative burdens on employers that offer such coverage by requiring employers to calculate the portion of their health care contribution attributable to a non-spouse, non-dependent beneficiary and to maintain a separate system for income tax withholding and payroll tax obligations.

Question or comments on this legislation should be addressed to Gretchen Young ( gyoung@eric.org ).

Websites:

H.R. 2088

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