October 6, 2009: PRELIMINARY SHARE FINDING: The legal debate surrounding Section 125 plans and HIPAA might discourage employers from adopting these plans.
In the debate over health care reform at the federal level, a number of legislators have suggested tax incentives as a way to make health insurance more affordable. Most notably, the bi-partisan plan proposed by former Senate leaders Tom Daschle (D-SD), Bob Dole (R-KS), and Howard Baker (R-TN) includes tax credits for small businesses that offer health benefits and a refundable tax credit to offset the cost of insurance for lower-income families.
At the state level, tax incentives enjoy mostly bipartisan support, and nearly every state has some form of tax incentive in place to promote the purchase of private insurance. Given the likelihood that federal health reform will include measures to restructure tax incentives, it makes sense to review the states' many experiences using tax incentives to increase coverage. To that end, SHARE has just released a report that summarizes the states' use of tax incentives to promote insurance coverage and provides a state-by-state description of current policies. Specifically, the report looks at the use of tax credits, tax deductions, and "Section 125" plans at the state level.
To view the SHARE report on tax incentives, click here.
SHARE grantee Mark Hall is studying the effectiveness of Section 125 plans in expanding insurance coverage, examining the use of these plans in Indiana, Massachusetts, and Missouri. One of Mark's preliminary findings is that the legal debate surrounding Section 125 plans and the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) will likely complicate states' attempts to use section 125 plans to lower the costs of individual insurance and might discourage employers from adopting or continuing the use of section 125 plans.
Click here to read Mark Hall's complete analysis of Section 125 plans and HIPAA.
Click here to learn more about Mark Hall's SHARE-sponsored study, "Sheltering Employee Premium Contributions from Tax Using 'Section 125' Plans."