How Would House Health Care Plan Affect Employer, Individual Coverage?

Written by TaxFoundation


Washington, DC - Members of Congress are hosting town hall meetings across the country this month to garner support for health care reform and hear constituents' concerns, but what would current legislation really mean for individuals' health care coverage? A Tax Foundation report examines "America's Affordable Health Choices Act" and provides an outline of how the bill would affect various health insurance scenarios.


"Many industry phrases are being thrown around in the media, but a lot of Americans are wondering how these reforms would really affect their families' health coverage," Tax Foundation President Scott Hodge said. Tax Foundation Fiscal Fact No. 185, "Outline of Individual and Employer Coverage under House Health Care Reform Bill," is available online at TaxFoundation. The proposed legislation would establish a public option for health insurance that would be available in a national health insurance exchange in which private insurers also would be allowed, as well as new taxes on both businesses that do not provide health insurance to employees (also known as "pay or play") and on individuals not covered by employer plans who do not purchase health insurance on their own.

For example, under the House plan, companies with fewer than 50 employees and payrolls greater than $400,000 that do not offer health insurance to workers must pay a tax equaling 8% of total payroll. A same-sized company that does offer health insurance to employees has the option of purchasing health insurance from outside or within the exchange (including the public option) and may also be eligible for tax credits if the company is small enough and average wages are low enough.

An individual working at the first company (no employer-provided insurance) making between 133% and 400% of the federal poverty level (around $88,000 for a family of four in 2009) may purchase health insurance through the exchange (private or public) and have it partially subsidized by the government. If the individual makes more than 400% of the federal poverty level, he or she would be required to purchase health insurance through the exchange or pay a tax.

An individual working at the second company (has employer-provided insurance) must enroll in the employer's plan assuming premiums do not exceed 11% of income. The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.


Fiscal Fact No. 185 is available online at TaxFoundation. To schedule an interview, please contact Natasha Altamirano, the Tax Foundation's

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