McCain's Health Plan

Right now I work for an employer that #1. Doesn't know how to get the best deal for their employees for healthcare and #2. would love it if they didn't have to provide health insurance for their 5,000 plus employees. I purchase the highest health plan and that means I pay more in premiums than some of my co-workers. I don't use the HSA, so I can have a better health plan and I do use the FSA. I don't have a lot of health issues. I do have asthma and thank goodness I haven't had to use my healthcare much because my healthcare plan sucks. Believe me, when I leave this job it will be for two reasons and one of them is the lousy insurance.

I've heard of jobs where the pay is a little lower, but the benefits packages (tuition reimbursement, healthcare, etc.) are excellent. These positions have made me stop and think about whether I would jump ship to gain better benefits, but not gain much more in money.

Let me say this: I don't want the government supplying me with healthcare -- I want my employer subsdizing it. Right now, one of the few tax breaks I get is the pre-tax healthcare benefit for which I pay $84.49 per month or $1013.88 per year. Remember, this is completely tax free.

McCain wants to take that little tax break away. According to CNN Money, the amount my employer pays "would become taxable income. But anyone who buys insurance would receive a refundable tax credit worth $2,500 per person ($5,000 per family). That's a dollar-for-dollar reduction of your tax bill, or, if you don't have a tax bill, a dollar-for-dollar increase in the amount of money Uncle Sam would send your way."

Except it isn't. Right now, my employer pays $276.82 per month or $3321.84 per year. Under McCain's plan, I'll be taxed on that amount. So, I won't get the out of pocket pre-tax break and now my income will look like it has gone up and I'll be paying even more in taxes. But, McCain gets to tell you that he's offering you a tax break. Let's take a look at that.

McCain wants to give a single person a tax credit (and by the way, there's a difference between a tax deduction and a tax credit. A tax credit reduces what you owe and a tax deduction reduces the amount on which you pay) a total of $2,500. So, if I purchase the insurance I have now, it will cost me $4335.72 -- because the tax break is only for those people who buy their own insurance. The government will be giving me $2500 back, bringing my grand total to $1835.72, which is not only $821.84 more than I pay out of pocket now, but it's all taxed, which adds to the amount that I give back to the government.

Let's just see how much more someone who makes $50,000 a year will pay our government and for health insurance.

I'm using last year's tax tables and I'm going to make the assumption that I'm still allowed to put tax free money into flexiben, which'll keep some figures the same. I'm, also, assuming that I can even purchase the insurance and maintain at least the same coverage for the same price as my employer, but we know that won't be true. Also, keep in mind, your salary goes up on your Federal form, it goes up on your state form. (And, yeah, I know, some states don't have income tax. Bully for you.)

Under the current system, taking off the $1,013.88 for current healthcare costs and $2,500 for Flexiben a single person's taxable income (with no deductions, but the standard) is $41,136.12. The tax amount is $6,705.00. That comes to 16.29% for Federal Tax. And, I've only paid $1,013.88 for healthcare.

Now, the new system:
$50,000.00 salary
$ 2,500.00 flexiben
$ 5,350.00 standard deduction
$42,150.00 taxable income

$6,955.00 taxable amount

My tax amount is now $250.00 higher under the new system. I'm now taxed at the higher amount of 16.50%. Oh, wait, I did forget to take the tax credit off.

Okay, now, I'm paying $4,455.00 in Federal income tax. That's a lowering of my taxes by just under 6%. Hey, that sounds pretty good, doesn't it?

Except my state income tax rate is 6.5%. Under the old system, I report $41,136.12 in income and I'm taxed: $2,673.84. Under the new system, I report $42,150.00 in income and I'm taxed: $2,739.75. A difference of $65.91. So, now, I've paid more in taxes -- not much more, but still more AND I've paid more for my insurance coverage: $821.84 more.

And, what did I get for it? $821.84 could pay for a new laptop or pay for a gifts for my grandsons. Maybe, I might give that money to charity.

But, who benefits?

My employer. They now get to save $3321.84 and if you think they'll pass that savings on to me in the form of a raise -- think again. It goes in their pocket. Multiply that by 5,000 employees and they've saved $16,609,200.00. It isn't going to be in the employees' pockets -- I can guarntee you that. Some companies might be willing to pass the savings along, but most won't and you know they won't.

You know who else benefits?

The insurance companies. They can then charge me more for insurance because I'm no longer a part of a group.

You know who won't benefit?

American workers. They'll have even less in their pockets than they do now. According to McCain, that'll be a good thing. But, then, the Republicans are acting like our country is chugging along just fine and we don't need to fix it. Life is good. And, if you think the economy is bad, you have a mental condition.

Someone recently called me a single issue voter, but I'm not. I have loads of reasons for no longer backing McCain. His ideas are not good for me. Ask yourself, are they going to be good for you?

God Bless