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By ROBERT PEAR
WASHINGTON — As workers open their W-2 forms this month, many will see a new box with information on the total cost of employer-sponsored health insurance coverage. To some, it will be a surprise, perhaps even a shock.
Workers often have little idea how much they and their employers are paying for coverage. In many cases, economists say, workers give up cash compensation to get and keep health benefits.
The disclosures, required by the 2010 health care law, are meant to make workers more cost-conscious. Health benefits are still tax-free. But labor unions and employer groups say it could be easier to tax them in the future, now that employers must report their value to the government.
The new information appears in Box 12 of the standard W-2 form, with a two-letter code, DD. The box shows the “cost of employer-sponsored health coverage.” And that amount is not taxable, the Internal Revenue Service says on the back of the form.
Jay J. Makled, a union steward for the United Automobile Workers at the Ford plant in Dearborn, Mich., described his reaction after seeing that his health coverage cost nearly $16,000 last year: “It’s quite expensive. I was surprised to see how much the company was paying for that benefit.”
Hourly employees represented by the union there said they generally did not pay any of the premium.
The number on the W-2 form is supposed to reflect the part of the cost paid by the employer and the part paid by the employee.
Prof. Nicole Huberfeld, an expert on health law at the University of Kentucky, who received her W-2 form on Monday, said, “Most people who get health insurance from their employers have no idea how much it costs.”
“People are often shocked when they see the cost, $12,000 to $16,000 a year,” Ms. Huberfeld said. “Many Americans believe this is something they get free. But employers pay lower wages because they provide insurance.”
In 2012, according to an annual survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance averaged $5,615 a year for single coverage and $15,745 for family coverage. Over five years, the costs have increased 25 percent for individual coverage and 30 percent for family coverage.
“Health coverage is a big piece of people’s income and a large part of the social welfare budget,” said C. Eugene Steuerle, a tax economist at the Urban Institute. “But the benefits are not taxable, and most of the spending is hidden, so we don’t consider the trade-offs. If we want to get control of health care costs, people have to be aware of them.”
That is the goal of the disclosure requirement, which was proposed by a bipartisan group of senators: two Republicans, Charles E. Grassley of Iowa and Michael B. Enzi of Wyoming, and two Democrats, Max Baucus of Montana and Ron Wyden of Oregon.
Congress acted after Peter R. Orszag, then the director of the Congressional Budget Office, told lawmakers: “The economic evidence is overwhelming, the theory is overwhelming, that when your firm pays for your health insurance, you actually pay through reduced take-home pay. The firm is not giving that to you for free.”
The tax-free treatment of employer-provided health benefits is the largest tax break in the tax code, costing the government roughly $180 billion a year in lost revenue, or 80 percent more than the home mortgage interest deduction, according to the administration.
Katie W. Mahoney, the executive director of health policy at the U.S. Chamber of Commerce, said, “It’s useful for employees to know the value of coverage their employers provide.” But she said some employers worried that reporting the benefit on the W-2 form could lead to taxing the benefit.
“That’s not the intent of the current requirement,” Ms. Mahoney said. “But once the information is collected by the government, it’s very easy for another administration to have a different intent.”
An employee of the A.F.L.-C.I.O. whose health coverage was listed as costing more than $20,000 said: “That knocks my socks off. When I saw the number, my eyes popped out. I appreciate my employer all the more.”
The employee said he had been told not to discuss the cost publicly because the union did not want to suggest that some employees had “Cadillac coverage.”
An employer that fails to comply with the reporting requirement could be subject to penalties of $200 per W-2 form, up to a maximum of $3 million, tax lawyers said.
Employers are exempt from the reporting obligation if they are required to file fewer than 250 W-2 forms, the I.R.S. said. That could change, but the agency said employers would be given at least six months’ notice.
and in related news (file under Term Limits . . .)
No Pay? Little Sacrifice for Many in Congress
By JEREMY W. PETERS
WASHINGTON — In principle, it sounds self-sacrificing, even noble: Congress swears off collecting its paychecks until it passes a budget.
But behind the “no budget, no pay” proposal, which the House passed last week when it voted to temporarily extend the debt limit, is also a basic reality: many of those who support the concept are so wealthy that their Congressional paychecks represent little more than a rounding error.
Take Representative Dave Camp, a Michigan Republican who led the charge on the measure in the House. He has a net worth between $3.8 million and $9.7 million, according to an analysis of his most recent financial disclosure by the Center for Responsive Politics.
That is not exactly a fortune befitting a Rockefeller or a Kennedy, but it is more than enough to cushion any discomfort he might feel from missing a few paydays. Many of the other lawmakers who have championed “no budget, no pay,” both Republicans and Democrats, are similarly wealthy.
Congress, for all its democratic trappings, has long been richer than a typical collection of 535 Americans. But the gap between the financial standing of members and the population as a whole has grown in recent decades, analysts of financial disclosure forms say.
As many ordinary Americans have struggled to get by in recent years, members of Congress were largely insulated from the economic downturn, based on their net worth. The median net worth of American households is $66,740, while for the 535 members of Congress it is about $966,000, according to the Center for Responsive Politics. Congressional lawmakers earn at least $174,000 a year.
The Democratic co-sponsor of the “no budget, no pay” bill in the Senate, Joe Manchin III of West Virginia, is worth between $3.6 million and $11.7 million, according to the center’s tallies. The other Senate co-sponsor, Dean Heller, Republican of Nevada, is worth less but is still doing just fine, with a net worth of between $2.8 million and $3.4 million. The Senate may pass the measure as early as Wednesday.
When the debt limit extension passed the House last week, the chamber’s three wealthiest members voted yes: Michael McCaul, Republican of Texas (net worth estimated at $500 million, from Clear Channel Communications, founded by his wife’s family); Darrell Issa, Republican of California ($480 million, from Viper car alarms); and Jared Polis, Democrat of Colorado ($215 million, from the greeting card Web site Blue Mountain).
Representative Scott Rigell, Republican of Virginia, also pushed for the provision. His estimated net worth is as high as $52 million, and he returns 15 percent of his Congressional paycheck each year.
As moneyed as Congress is these days, some members would feel the pinch if they stopped receiving their paychecks. Senator Jeff Flake, Republican of Arizona, has a reported net worth of no higher than $300,000, making him one of the few nonmillionaires to support the bill. That also makes him the fifth-poorest member of the Senate, according to the figures from the Center for Responsive Politics.
WASHINGTON — As workers open their W-2 forms this month, many will see a new box with information on the total cost of employer-sponsored health insurance coverage. To some, it will be a surprise, perhaps even a shock.
Workers often have little idea how much they and their employers are paying for coverage. In many cases, economists say, workers give up cash compensation to get and keep health benefits.
The disclosures, required by the 2010 health care law, are meant to make workers more cost-conscious. Health benefits are still tax-free. But labor unions and employer groups say it could be easier to tax them in the future, now that employers must report their value to the government.
The new information appears in Box 12 of the standard W-2 form, with a two-letter code, DD. The box shows the “cost of employer-sponsored health coverage.” And that amount is not taxable, the Internal Revenue Service says on the back of the form.
Jay J. Makled, a union steward for the United Automobile Workers at the Ford plant in Dearborn, Mich., described his reaction after seeing that his health coverage cost nearly $16,000 last year: “It’s quite expensive. I was surprised to see how much the company was paying for that benefit.”
Hourly employees represented by the union there said they generally did not pay any of the premium.
The number on the W-2 form is supposed to reflect the part of the cost paid by the employer and the part paid by the employee.
Prof. Nicole Huberfeld, an expert on health law at the University of Kentucky, who received her W-2 form on Monday, said, “Most people who get health insurance from their employers have no idea how much it costs.”
“People are often shocked when they see the cost, $12,000 to $16,000 a year,” Ms. Huberfeld said. “Many Americans believe this is something they get free. But employers pay lower wages because they provide insurance.”
In 2012, according to an annual survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance averaged $5,615 a year for single coverage and $15,745 for family coverage. Over five years, the costs have increased 25 percent for individual coverage and 30 percent for family coverage.
“Health coverage is a big piece of people’s income and a large part of the social welfare budget,” said C. Eugene Steuerle, a tax economist at the Urban Institute. “But the benefits are not taxable, and most of the spending is hidden, so we don’t consider the trade-offs. If we want to get control of health care costs, people have to be aware of them.”
That is the goal of the disclosure requirement, which was proposed by a bipartisan group of senators: two Republicans, Charles E. Grassley of Iowa and Michael B. Enzi of Wyoming, and two Democrats, Max Baucus of Montana and Ron Wyden of Oregon.
Congress acted after Peter R. Orszag, then the director of the Congressional Budget Office, told lawmakers: “The economic evidence is overwhelming, the theory is overwhelming, that when your firm pays for your health insurance, you actually pay through reduced take-home pay. The firm is not giving that to you for free.”
The tax-free treatment of employer-provided health benefits is the largest tax break in the tax code, costing the government roughly $180 billion a year in lost revenue, or 80 percent more than the home mortgage interest deduction, according to the administration.
Katie W. Mahoney, the executive director of health policy at the U.S. Chamber of Commerce, said, “It’s useful for employees to know the value of coverage their employers provide.” But she said some employers worried that reporting the benefit on the W-2 form could lead to taxing the benefit.
“That’s not the intent of the current requirement,” Ms. Mahoney said. “But once the information is collected by the government, it’s very easy for another administration to have a different intent.”
An employee of the A.F.L.-C.I.O. whose health coverage was listed as costing more than $20,000 said: “That knocks my socks off. When I saw the number, my eyes popped out. I appreciate my employer all the more.”
The employee said he had been told not to discuss the cost publicly because the union did not want to suggest that some employees had “Cadillac coverage.”
An employer that fails to comply with the reporting requirement could be subject to penalties of $200 per W-2 form, up to a maximum of $3 million, tax lawyers said.
Employers are exempt from the reporting obligation if they are required to file fewer than 250 W-2 forms, the I.R.S. said. That could change, but the agency said employers would be given at least six months’ notice.
and in related news (file under Term Limits . . .)
No Pay? Little Sacrifice for Many in Congress
By JEREMY W. PETERS
WASHINGTON — In principle, it sounds self-sacrificing, even noble: Congress swears off collecting its paychecks until it passes a budget.
But behind the “no budget, no pay” proposal, which the House passed last week when it voted to temporarily extend the debt limit, is also a basic reality: many of those who support the concept are so wealthy that their Congressional paychecks represent little more than a rounding error.
Take Representative Dave Camp, a Michigan Republican who led the charge on the measure in the House. He has a net worth between $3.8 million and $9.7 million, according to an analysis of his most recent financial disclosure by the Center for Responsive Politics.
That is not exactly a fortune befitting a Rockefeller or a Kennedy, but it is more than enough to cushion any discomfort he might feel from missing a few paydays. Many of the other lawmakers who have championed “no budget, no pay,” both Republicans and Democrats, are similarly wealthy.
Congress, for all its democratic trappings, has long been richer than a typical collection of 535 Americans. But the gap between the financial standing of members and the population as a whole has grown in recent decades, analysts of financial disclosure forms say.
As many ordinary Americans have struggled to get by in recent years, members of Congress were largely insulated from the economic downturn, based on their net worth. The median net worth of American households is $66,740, while for the 535 members of Congress it is about $966,000, according to the Center for Responsive Politics. Congressional lawmakers earn at least $174,000 a year.
The Democratic co-sponsor of the “no budget, no pay” bill in the Senate, Joe Manchin III of West Virginia, is worth between $3.6 million and $11.7 million, according to the center’s tallies. The other Senate co-sponsor, Dean Heller, Republican of Nevada, is worth less but is still doing just fine, with a net worth of between $2.8 million and $3.4 million. The Senate may pass the measure as early as Wednesday.
When the debt limit extension passed the House last week, the chamber’s three wealthiest members voted yes: Michael McCaul, Republican of Texas (net worth estimated at $500 million, from Clear Channel Communications, founded by his wife’s family); Darrell Issa, Republican of California ($480 million, from Viper car alarms); and Jared Polis, Democrat of Colorado ($215 million, from the greeting card Web site Blue Mountain).
Representative Scott Rigell, Republican of Virginia, also pushed for the provision. His estimated net worth is as high as $52 million, and he returns 15 percent of his Congressional paycheck each year.
As moneyed as Congress is these days, some members would feel the pinch if they stopped receiving their paychecks. Senator Jeff Flake, Republican of Arizona, has a reported net worth of no higher than $300,000, making him one of the few nonmillionaires to support the bill. That also makes him the fifth-poorest member of the Senate, according to the figures from the Center for Responsive Politics.
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