• Melding Health Overhaul and Taxes Gets Complicated

    Posted on January 5, 2015 by in Breaking News

    Life Insurance, Medicare, CJB InsuranceSource: Associate Press

    President Barack Obama’s health care law uses the tax system to subsidize coverage for the uninsured.

    Promoting social policy goals through the tax code is a time-honored strategy for both political parties.

    For example, the nation’s main anti-poverty program, the Earned Income Tax Credit, uses the tax system to supplement the earnings of low-income families.

    But melding insurance and taxes — two of the most complicated topics for consumers — won’t be easy.

    Some pros and cons:

    PRO: Could build support for the health overhaul because tax credits have greater political popularity than traditional government spending programs.

    CON: Complicates tax filing for many lower-to-middle income people, who may not be able to afford tax-preparation services.

    PRO: Avoids the social stigma associated with safety-net programs.

    CON: Requires people who get the health insurance tax credits to accurately project their incomes for the coming year, a real challenge for those who may not have stable employment.

    PRO: The Internal Revenue Service has a lot of experience administering tax provisions that serve a social policy agenda, from mortgage deductions to child care tax credits.

    CON: It strains the agency when an estimated $385 billion a year in taxes owed, or more, goes uncollected.

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