Originally published October 24, 2008 at 12:00 AM | Page modified October 24, 2008 at 8:09 AM
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Calculating what McCain's health plan would do
A look at the effects of John McCain's health-care proposal
Calculating McCain's tax on health benefits
John McCain's goal of shifting Americans away from employer-provided insurance could most affect people who already have decent coverage. McCain would tax workers on the value of benefits they get from their employer. To offset higher taxes, he would offer tax credits, which workers could use to buy coverage.
Barack Obama's plan is more difficult to analyze because he has not provided detailed figures on proposed subsidies or potential penalties.
Here's how McCain's plan would affect a couple with two children, earning the median household income for King County and with an average employer plan worth $12,000 a year, of which the employer pays 75 percent.
Adjusted gross income: $80,000
Standard deduction for married, filing jointly,
plus exemptions for four people: $24,900
Taxable income: $55,100
Federal income tax (15 percent bracket): $7,462
Employee's portion of premiums: $3,000
Income tax plus premiums cost: $10,462
If you stay on employer's plan and take McCain's tax credit:
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Adjusted gross income: $80,000
Employer's portion of premiums: $9,000
Standard deduction, exemptions: $24,900
Taxable income: $64,100
Federal income tax (15 percent bracket): $8,812
Employee's portion of premiums: $3,000
Refundable tax credit for family: $5,000
Income tax minus tax credit exceeding premium costs: $6,812
If employer stops coverage and you use the tax credit to buy a comparable plan on your own:
Adjusted gross income: $80,000
Standard deduction, exemptions: $24,900
Taxable income: $55,100
Federal income tax (15 percent bracket): $7,462
Full premiums for a plan comparable to employer coverage: $12,000
Refundable tax credit: $5,000
Income tax plus premiums cost: $14,462
Note: McCain's plan would continue to exempt health benefits from Social Security and Medicare taxes.
Source: Valerie Moseley, certified public accountant with Joseph & Associates in Seattle
What McCain's tax credits might buy
Shannon Fuhrman, manager of individual sales at Regence BlueShield, offers her picks from among Regence's plans.
A 25-year-old nonsmoker with $2,500 tax credit
Regence Breakthru 80*
Member pays first $1,500 of medical expenses
Plan then covers 80 percent of medical costs from preferred doctors and hospitals
Includes coverage for prescription drugs, vision, maternity, preventive care, alternative care and mental health.
No referrals required to see specialists
Cost: $180 per month, or $2,160 per year. For a 50-year-old, monthly rates are $418, or $5,016 per year.
* Regence will stop selling the $1,500 deductible Breakthru plan to new members on Nov. 21. Current members can continue their coverage.
A couple, one 45 and the other 50, with two kids and $5,000 in tax credit
Regence HSA Healthplan
Family pays first $7,000 in medical expenses
Plan then covers 80 percent of medical costs from preferred doctors and hospitals
Includes preventive care, alternative care and mental health coverage
No referrals required to see specialists
Cost: $409 per month, or $4,908 a year.
Source: Regence BlueShield
Copyright © 2008 The Seattle Times Company
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UPDATE - 12:01 PM
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