I walked in half way thought a conversation this morning and I could not make heads or tails of it, so I thought I'd bring it up here. It has to do with "universal health care" and taxes.
Apparently, if your employer pays for your life insurance benefits (and it is of/at or above a certain amount) you will be responsible for paying taxes on that? Anybody hear anything along those lines?
I have heard some crazy things like that. People are so naive to think that we aren't going to pay out of the wazoo for this healthcare. The benefits working people have had all along are now a luxery because so many didn't set themselves up in life to have the kinds of job that provide them. Sorry, that is just sad.
I got a letter from my HR dept last week, in reference to this very thing:
Employees please note:
If you prefer NOT to pay taxes on the additional life insurance coverage of over $50,000, pls complete the form and give it to HR immediately, ASAP before this Friday, Jan 25, 2013. We’ll then make the adjustment accordingly before your next paycheck.
- If your annual, base salary is less than $50,000, you’re not impacted. You don’t have to do anything.
- If your annual, base salary is more than $50,000 and you want to retain the maximum basic life insurance coverage (where the premiums are paid 100% by the company), then you don’t have to do anything.
I took this directly out of the PDF that was sent by my HR folks:
Example: A 35 year old employee is provided with $100,000 group life coverage by his employer. The amount added to his income for employer provided life insurance is determined as follows:
Total Life Insurance
Less: Amount excludable
Monthly cost per each $1 ,000
Annual cost per $1 ,000 ($ .09 x 12)
Employee annual benefit ($1.08 x 50)
Annual taxable income
As you can see from the example, an additional $50,000 of life insurance would cost this employee $54.00 in taxable income. Based on a 15% tax bracket, the tax owed would be $8.10
NOTE: Employees have the option to opt out of receiving the life insurance over $50,000 by signing a waiver which can be obtained from an HR representative.
I know this is no mystery to you, but see.... this is another one of those things that was not clearly defined in this wonderful health care system being forced upon us.
It has to be paid for somehow, someway.... this is one of those covert little ways of paying for it. There will be more and they will be exposing themselves before this plan goes into effect. I'd assume some will be more drastic measures but like gene said above and our good friend Nancy Pelosi said a couple of years back, "We'll have to pass this bill to see whats in it.".
I believe this is more of that "transparency in government" stuff we were promised.
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