This can be done through insurance carriers for those who purchase individual health insurance coverage as well as through the employer payroll process for those who purchase coverage in an employer-sponsored plan. If administration becomes too difficult, it won't be cost-effective for employers and insurers to handle this administration, and they will elect not to advance tax credits to individuals. This will result in the tax credit not being available to individuals and families until they file their tax return. Over the years, NAHU has spent a considerable amount of time looking at the dollar amount of a health insurance tax credit. In doing so, we looked carefully at the amount of coverage that is currently financed by employers.
Employers pay for much of the coverage that insures most people today.
It is very important that in our zeal to do something about those without health insurance that we don't inadvertently discourage employer funding of coverage for those who are already insured. For that reason, it is important that a health insurance tax credit be low enough so that it will not provide an incentive for employers to discontinue their financial contributions towards plans. At the same time, it is important that the credit be large enough to provide a meaningful incentive for people without access to an employer-sponsored plan to obtain coverage. Keep in mind that coverage offered in employer-sponsored plans provides a significantly higher level of benefits in many cases that what is available in the individual market, in addition to being less expensive, and in the employer market, employees would be able to combine a tax credit with their employer's contribution. The controlled access in employer plans is also much more effective at keeping a balanced risk pool than the individual health insurance market.