Obama Administration Clarifies Tax-Reporting Provision in Reform Law
In a blog post on Tuesday, the White House reminded employers and workers that a provision in the federal health reform law requiring the IRS to publish the value of workers' health benefits on W-2 forms does not mean those benefits will be taxed, the Wall Street Journal's "Washington Wire" reports (McKinnon, "Washington Wire," Wall Street Journal, 10/12).
Stephanie Cutter -- special projects aide to President Obama -- wrote in the post that the provision is intended only to let consumers know more about the value of their benefits.
Cutter wrote, "For months, opponents of health reform have falsely claimed that the [overhaul] would lead to the taxation of health care benefits. The claim wasn't true when the rumor first surfaced, it isn't true today and it won't be true tomorrow" (CQ HealthBeat, 10/12).
The reform law mandates that all employers providing health insurance include the information on workers' W-2s after 2010. However, the Obama administration recently announced that reporting the information on 2011 forms will be voluntary, saying that extra time is necessary for employers to prepare to comply with the provision (McCarthy, CongressDaily, 10/12).
According to "Washington Wire," the exclusion of health benefits from workers' taxable income is one of the largest tax breaks provided by the federal government.
Some observers believe that recording the cost of employer-sponsored health plans on W-2s eventually could persuade government officials to start taxing them to generate additional revenue, a proposal some lawmakers from both parties favor ("Washington Wire," Wall Street Journal, 10/12).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.