NCPA - National Center for Policy Analysis

Tax Credits for Uninsured Families

March 12, 1999

House Majority Leader Dick Armey (R-Texas) is proposing to equalize the tax treatment of health insurance premiums by giving individuals a tax break. Under current law, individuals are not taxed on the value of health insurance if their employer provides the coverage, but they are taxed if they pay the premiums themselves.

The most recent version of Armey's plan is called the Fair Care for the Uninsured Act. Tax fairness is the key to helping people who cannot afford health insurance, according to Dean Clancy, Armey's health policy adviser, speaking at a recent Capitol Hill health reform forum sponsored by the National Center for Policy Analysis.

  • The act would give individuals who purchase their own health insurance a refundable income tax credit of $800 per adult and $400 per child up to a maximum of $2,400 for a family.
  • The credits would be indexed for inflation and would be available to anyone who buys a qualified private health insurance policy and is not already covered by a federally subsidized benefit like Medicare or an employer-sponsored health plan.
  • Any tax credit funds that go unused would be given to the states in the form of a new "safety net block grant" for the uninsured, which states could use for such things as creating risk pools for high-risk individuals who cannot obtain health insurance anywhere else.

Source: "More Details Released on Armey Proposal for Health Care Tax Credits for Uninsured," BNA's Health Care Policy Report, March 8, 1999.


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