WASHINGTON, Dec. 19, 2013 /PRNewswire-USNewswire/ -- Congressman Chaka Fattah (D-PA) introduced legislation today that would provide incentives for individuals to purchase premiums in the new health insurance marketplace. The Healthcare Premium Parity Act (H.R. 3791) will allow individuals who are not enrolled in a group insurance plan, including civil service and military retirees, to take above-the-line deductions on their tax returns for the amount of their health insurance premiums. Currently, these individuals are exempt from paying income taxes on these dollars if their medical expenses exceed 7.5% of their adjusted gross income.
"Individuals in this country now have an opportunity to benefit from the Affordable Care Act and the Health Insurance Marketplace, however, there should be parity in the tax code for purchasing health insurance premiums," Congressman Fattah said. "This bill directs that anyone who is purchasing insurance outside of an employer-based plan will now be able to pay for that insurance with pre-tax dollars."
Current tax law handles payments for health insurance premiums in different ways. Premiums for individuals who purchase insurance through their employers are exempt from both income and payroll taxes. However there are individuals, like government retirees, who are only exempt from income taxes. The Healthcare Premium Parity Act will allow these people to take a deduction on their tax returns for the amount of their health insurance premiums. This above-the-line deduction would subtract the cost of the health premium from an individual's adjusted gross income.
"While the vast majority of Americans will continue to receive health care via their employer, we should be making it easier and more cost-effective for those who are now turning to the Marketplace as a result of the Affordable Care Act. Not only will this legislation provide an added incentive to purchase a health care plan, it will in turn lower the cost of healthcare for all Americans," Fattah said.
SOURCE Office of Congressman Chaka Fattah