Health Insurance Premiums

[surfered]

As a retired CPA, I still prepare income tax returns pro bono for friends and neighborhood widows and orphans.

One of the provisions of the Affordable Care Act was the required reporting of the cost of employer provided health insurance. It's reported in box 12a (Code DD) of Form W-2.

My most recent return was for a 40 year-old single male (the son of a very good friend). His gross wages were $25,778. The cost of his employer proved health insurance for 2025 was $7,744, which is 30% of his gross income and he has no chronic health problems. If it wasn't employer provided, there's no way he could afford coverage.

There is something terrible wrong with our system.

[gab13by13]

1. Bernie Sanders has been saying this for at least 50 years.

[enough]

2. That's a wonderful human service you are providing.

Filing taxes can be bewildering and anxious, Knowing they’re done right is a gift. You’re a good friend to your community.

And yes, our system is terribly wrong.

[leftstreet]

3. Single Payer, non profit. Now. n/t

[Freddie]

4. Payroll admin here

If he was covering a family it would be about $25k.
RWNJs are screaming about “if it was so affordable why do we need subsidies” not considering that most of them get a HUGE “subsidy” from their employer.

[dalton99a]

5. It is barbaric.

[MuirHero]

6. Must the cost of employer provided health insurance be reported to the IRS as taxable compensation?

[twodogsbarking]

9. No. But if you pay on your own you do so with money already taxed, at least once.

Retired couple. Pay medicare $5,000 pay supplemental $8000.

[LuckyCharms]

10. No, it is reported, but not as taxable income.

The cost is reported on a W2 for informational purposes only.

Additionally, the premiums paid by the employee (the employee's share of the total premium) that is deducted from the employee's paycheck reduces the taxable income that is reported to the IRS.

Premiums are typically split between the employee and the employer. The portion paid by the employee is called "pre-tax" premiums. Pre-tax medical premiums are health insurance payments deducted from your gross pay before federal, state, and FICA (Social Security/Medicare) taxes are calculated. This method reduces your taxable income.

Edit to add: The above applies only when the employee portion is withheld from your paycheck. Conversely, if you buy your own insurance, you are paying with "after tax" dollars, that do not reduce your taxable income.

[erronis]

7. This is why they will try to get rid of Medicare (real Medicare) and VA health

Because they work and have far lower administrative costs than commercial insurance.

Because they want the money.

[dflprincess]

8. And if he wasn't on his employers' plan

and had to buy individual coverage, his cost would be even higher.

When will we wake up?

[progressoid]

11. Yep. That happened to me.

I was in that hole for a couple years until I could get on my wife's insurance.

Had to buy super expensive insurance that covered very little.

[BigmanPigman]

16. In 2012 I was a teacher part time.

My teacher salary was $1,200 a month. My health insur was 100% paid by me and it was $1,400 a month. So I was basically working only in order to pay for my health care and even at that it was a loss of $200 a month.

[Soul_of_Wit]

12. The last time I had a job where my employee contribution to premiums was zero was in the early '90s

Since then, I have paid as much as 20% of my gross pay towards healthcare premiums (paid with pre-tax dollars, of course.) Any free plans offered by various employers would have been too costly to actually use for non-catastrophic purposes (due to high deductibles.)

[GoodRaisin]

13. It's a massive scam the American people have been locked into by the

insurance oligarchy.

[W_HAMILTON]

15. He could purchase a plan through an ACA exchange for much less than that out-of-pocket.

Here's an estimate for a person like you mentioned, including what he would have paid before Trump and his Republucans raised premiums:

https://www.kff.org/interactive/calculator-aca-enhanced-premium-tax-credit/#state=&zip=&income-type=dollars&income=26000&employer-coverage=0&people=1&alternate-plan-family=&adult-count=1&adults%5B0%5D%5Bage%5D=21&adults%5B0%5D%5Btobacco%5D=0&child-count=0