Health care insurance costs now on W-2

[jclarksnakes]

Here is another twist. I am retired military and DW is a teacher. DW has no health insurance coverage at her work because we instead use Tricare Prime. My retirement income is reported on a 1099R I got a couple days ago which has no entry for health insurance cost. On DW's W2 her block 12 DD value is reported as $4587. If reporting this number is so important to somebody in the governement why is it not reported on retired military 1099s? Also the value reported on DW's W2 is wrong. Will there be any repercussions for employers who report an incorrect number?

[bondi688]

Quote:

Originally Posted by Semiretired2008 Sounds like a potential build-up for when and if they decide to start taxing it...

That has been discussed frequently enough by the politicians and likely will happen in the near enough future. Why else would they put that on the W-2 form?

[Rustward]

Quote:

Originally Posted by jclarksnakes Here is another twist. I am retired military and DW is a teacher. DW has no health insurance coverage at her work because we instead use Tricare Prime. My retirement income is reported on a 1099R I got a couple days ago which has no entry for health insurance cost. On DW's W2 her block 12 DD value is reported as $4587. If reporting this number is so important to somebody in the governement why is it not reported on retired military 1099s? Also the value reported on DW's W2 is wrong. Will there be any repercussions for employers who report an incorrect number?

If that happened to me I would ask the employer for an explanation.

[ziggy29]

Quote:

Originally Posted by jclarksnakes Here is another twist. I am retired military and DW is a teacher. DW has no health insurance coverage at her work because we instead use Tricare Prime. My retirement income is reported on a 1099R I got a couple days ago which has no entry for health insurance cost. On DW's W2 her block 12 DD value is reported as $4587. If reporting this number is so important to somebody in the governement why is it not reported on retired military 1099s? Also the value reported on DW's W2 is wrong. Will there be any repercussions for employers who report an incorrect number?

It only applies to current employees with employer health insurance who are normally issued a W-2. It doesn't apply to the self-employed or to retirees:

Employer-Provided Health Coverage Informational Reporting Requirements: Questions and Answers

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Q10. Will employers now be required to issue a Form W-2 to retirees or other former employees to whom the employer would not otherwise issue a Form W-2? A. No.

[Independent]

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Originally Posted by timeasterday Just looked at my W2 and it says $12,683.47 in that box. But what do I do with this info? Is it useful?

Probably not to people who post here. Most of us are going to carefully research individual health insurance costs before we decide to ER.

IMO, we're kind of unusual. Lot's of people may think about retiring at 62 or even earlier and have some vague idea that they'll have to do something about health insurance, but never do any serious research. This is an annual reminder of how expensive it really is.

Another thought - almost all economists (plus some non-economists like me) think that the employer cost of health insurance comes out of the employees paycheck. There is some hope that employees will see the size of this number and be more supportive of ideas that might keep the cost down.

And, of course, there is the tax issue ...

[Independent]

Quote:

Originally Posted by travelover So, would I be correct in saying that if your employer provides you with health care, it is tax free to you, but if you have to purchase your own health care, you pay for it with after tax money? If true, that would seem kind of regressive.

I'll agree that it's bad public policy.

For personal financial planning, note that if you itemize you can deduct any medical expenses about 7.5% of your AGI. "Medical expenses" includes dental, vision, deductibles, copays, even mileage. When I was w**king, we never came close to the 7.5%. After I retired and we were buying high-risk individual insurance, we blew right through that number. I kept track of everything.

Thinking about a family of four with an $80k AGI and no employer subsidized health insurance, they can deduct all expenses over $6,000. They may come close to the $6,000 with dental, vision, etc. and end up deducting a good deal of their major medical premium.

[samclem]

Yes, it's a good step toward letting people know how much their "free" employer-provided health insurance costs. I'd even favor more info, perhaps easily available on a web site, showing other appropriate info (average costs for private policies for someone of the same age, average employer costs for employer-provided policies in your area, etc). Any common-sense steps that can be taken to help folks see and appreciate the costs of this health care/insurance would be useful.

[Mulligan]

Quote:

Originally Posted by Midpack We just got DW's W-2 yesterday and I noticed same, didn't know what it was at first. I knew exactly what HC cost/employee at my former employer was (with and without empl contributions), but she'd never heard estimates at her .org employer. Her DD was $16,641! She also contributed $4160 medical & $153 dental, though NOT over and above DD I assume? Plus out-of-pocket!!! I also got an online estimate (using a link an ER member provided yesterday) of what we'll spend for HC once ACA is fully enacted, and the estimate was $18,864/yr. We only spend about $41K/yr on all other expenses, there is something wrong when two healthy adults have to cough up $19K for health care - 32% of expenses. I was hopefully estimating $12K/yr even though I knew I was kidding myself. "We" can't get to addressing the cost, and rate of increase, of HC in this country (relative to the rest of the world) too soon for my tastes...[/rant]

Some of these estimated quotes just seem outrageous. I checked in my area and I can't believe it would be that high, compared to what I am currently paying on my own individual plan. Maybe they are overestimating the eventual cost. Hopefully, my grandfathered plan will hold for a while. I will be honest. If I get thrown on the exchange somehow, and had to pay what you are reading, I will seriously consider paying the fine and getting it when the occasion arises. I have been healthy my whole life and will assume that to be the case going forward. I will continue to check BP, cholesterol , and such and pay for physicals with cash. If a problem occurs, I'll buy later. I am not going to simply give $10,000 a way every year. I could probably pay cash for a heart attack treatment every 5 years and still come out a head. End of my rant

[samclem]

In other interesting developments regarding employer health costs:

Many unions are lobbying for changes to PPACA which would allow some of their members, who are covered by Union insurance plans or employer/union plans, to receive health insurance subsidies from the government. As the law is now written, the subsidies go only to lower-income individuals who don't have insurance provided by their employer. From this article:

Quote:

Union leaders say many of the law's requirements will drive up the costs for their health-care plans and make unionized workers less competitive. Among other things, the law eliminates the caps on medical benefits and prescription drugs used as cost-containment measures in many health-care plans. It also allows children to stay on their parents' plans until they turn 26. To offset that, the nation's largest labor groups want their lower-paid members to be able to get federal insurance subsidies while remaining on their plans. In the law, these subsidies were designed only for low-income workers without employer coverage as a way to help them buy private insurance.

I think many corporations may have made the same arguments about PPACA and competitiveness issues in the distant past.

Oh, and another development yesterday on employer-provided heath care and family members:

Quote:

Federal tax subsidies under the 2010 health law designed to help lower-income Americans afford insurance won't extend to dependents who can be covered through a family member's employer. The decision, announced by the Obama administration on Wednesday, means some low-income Americans whose employer-plan premiums are beyond their means won't be eligible for the main perk of the law. Several provisions are behind the wrinkle. Under the law, large employers have to provide coverage for their workers and subsidize it so that premiums don't come to more than 9.5% of an employee's wages. Otherwise, they face a fine. The administration determined last year that employers had to offer coverage to a worker's dependent children but wouldn't have to subsidize their inclusion in a plan. Employers aren't required to cover a worker's spouse. Many lower-income Americans who don't have access to affordable insurance will be eligible for federal tax subsidies toward the cost of premiums beginning next year. But the rules released Wednesday confirm that that benefit won't extend to dependents who can be covered through a family member's employer, even if the cost of that plan puts it beyond the family's means.

But, the silver lining . . .

Quote:

The administration said in a separate rule Wednesday that people in such situations would be among several groups who don't have to pay penalties for not carrying insurance coverage.

So, dependents of covered workers have to be covered, but they can be made to pay "full freight" (no subsidy from the employer). And no subsidy from the taxpayer, either. But, zero penalty for waiting until a major health crisis develops to buy insurance.


I'm a little surprised that the executive branch is making these major determinations in the benefits provided by this law, I would have thought such specifics would be included in the legislation itself. I wonder how the CBO was able to provide a cost estimate with so much uncharted territory. And that Kaiser Family Foundation calculator we all used--I wonder if these assumptions were included in their computations? It might be worth re-checking there after they have time to incorporate the "new truth."

[Animorph]

Quote:

Originally Posted by Mulligan Some of these estimated quotes just seem outrageous. I checked in my area and I can't believe it would be that high, compared to what I am currently paying on my own individual plan. Maybe they are overestimating the eventual cost. Hopefully, my grandfathered plan will hold for a while. I will be honest. If I get thrown on the exchange somehow, and had to pay what you are reading, I will seriously consider paying the fine and getting it when the occasion arises. I have been healthy my whole life and will assume that to be the case going forward. I will continue to check BP, cholesterol , and such and pay for physicals with cash. If a problem occurs, I'll buy later. I am not going to simply give $10,000 a way every year. I could probably pay cash for a heart attack treatment every 5 years and still come out a head. End of my rant

The difference is that you had to qualify with no pre-existing conditions for your individual insurance. Employer plans take all employees, all ages and conditions.

[FIREd]

DW's employer paid $13,231 and we paid an extra $2,750 out of pocket for a Blue Cross Anthem PPO plan for the 2 of us.

[FIRE'd@51]

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Originally Posted by Independent For personal financial planning, note that if you itemize you can deduct any medical expenses about 7.5% of your AGI.

Thanks to Obamacare, this threshold rises to 10% for those under 65 starting in 2013.

[anethum]

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Originally Posted by gerrym51 i will get shot for this. Obamacare is not bringing cost down

Although I did not live in Massachusetts or even in New England, the corporation I used to work for was based in Massachusetts and my health insurance was through Blue Cross of Massachusetts. The company's premiums and my share of the premium went DOWN when Romneycare went into effect. I expect the same thing to happen nationwide next year.

Everybody is paying one way or another for all of the people who are presently uninsured but who need health care services.

[Gatordoc50]

Ours was 23500.00 for three of us. We pay 170.00 per month.

[Midpack]

Quote:

Originally Posted by samclem In other interesting developments regarding employer health costs: Many unions are lobbying for changes to PPACA which would allow some of their members, who are covered by Union insurance plans or employer/union plans, to receive health insurance subsidies from the government. As the law is now written, the subsidies go only to lower-income individuals who don't have insurance provided by their employer. From this article: I think many corporations may have made the same arguments about PPACA and competitiveness issues in the distant past.

I just read the same article this afternoon.

It appears many people only heard 'no/fewer uninsured', 'no lifetime caps', 'no pre-existing conditions' and never stopped to a) note what HC already costs, or b) what those 'new' phrases might add to cost. I'll just say this is going to get interesting, and leave it at that.

[Ronstar]

I glanced at my W-2 and I do not have a DD listed. IIRC as a company owner, health insurance is a different animal. Mine shows up in box 14. As an owner, I had to "pay" my health ins, and I was reimbursed as "other earnings", so the premium I payed was included in my year to date income. It was subtracted from gross pay to get "social security wages" from which my 401k contribution was subtracted to arrive at the box 1 wages number.

Its been like this for years. It doesn't look like it has caused me any tax disadvantages since it was a wash at the paycheck level and not in the box 1 number.

[Original Wally]

Quote:

Originally Posted by Semiretired2008 Sounds like a potential build-up for when and if they decide to start taxing it...

Interesting point. Code Section 61 (IIFC) reads something like "Except as otherwise provided in this subtitle, gross income means all income from whatever source derived..."

SO, unless medical premiums and other "employee benefits" are specifically EXCLUDED from income they are included. At this point, they are excluded. The POINT is that the mechanism is already in place - all Congress needs to do is pul the plug on the exclusion.

[Mulligan]

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Originally Posted by Animorph The difference is that you had to qualify with no pre-existing conditions for your individual insurance. Employer plans take all employees, all ages and conditions.

Without question you are correct. That is why I am torn on this as I know the healthcare act was needed as insurance companies would exclude people for the smallest of reasons. People on Lipitor or blood pressure medicine are not the cause of our nations high health costs, but have been treated as such by the insurance companies in the individual market. The problem with health care costs are 20% of population are consuming 80% of the resources, with 5% accounting for almost 50%. Most of the 20% is treatment for people at the beginning of life and the end of life, so I have no solution that's for sure. Here is the link explaining the percentages I have quoted.

http://www.politifact.com/oregon/sta...-80-health-ca/

I would be a little worried myself, long term, if I was having that information put on my W-2. I can't imagine it was inserted as a public service reminder to hug your boss for the benefits you are receiving.

[samclem]

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Originally Posted by Mulligan The problem with health care costs are 20% of population are consuming 80% of the resources, with 5% accounting for almost 50%.

I don't know if we can say that's the reason our health care costs are high. That's just the nature of illness: Most people aren't ill, some are quite ill and a few are extremely ill and require a lot of care.
It seems to me that the health care cost problem is that we don't have an effective way to control them. There are only two fundamental approaches: mandatory price controls on services (i.e. the government says an MRI of a knee can only cost $147), or use of market forces to reduce the flow of money into the system while allowing insurers to compete based on premiums and quality of care. Both approaches have their fans and pros/cons. But if the money-tap is kept turned on, medical costs will keep rising.

[meierlde]

Quote:

Originally Posted by Independent I'll agree that it's bad public policy. For personal financial planning, note that if you itemize you can deduct any medical expenses about 7.5% of your AGI. "Medical expenses" includes dental, vision, deductibles, copays, even mileage. When I was w**king, we never came close to the 7.5%. After I retired and we were buying high-risk individual insurance, we blew right through that number. I kept track of everything. Thinking about a family of four with an $80k AGI and no employer subsidized health insurance, they can deduct all expenses over $6,000. They may come close to the $6,000 with dental, vision, etc. and end up deducting a good deal of their major medical premium.

In 2013 and following that goes to 10% of AGI. Note that long term insurance premiums are also included.