Cap on Employer Exclusion for Health Coverage

Under current law, the value of health insurance coverage provided by employers has been excluded from employees’ income without limit. Similarly, these expenditures are not subject to FICA or Medicare taxes. The Republican fiscal year 2025 budget proposal would contain a provision that would cap the tax exclusion for employer-sponsored health coverage.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about putting a cap on the employer tax exclusion for health insurance coverage.

Below is a summary of the debate that ensued between the two professors.