Chamber Calls for Improved Tax Deductions for Medical Expenses, Premiums

WASHINGTON, D.C. — The United States Chamber of Commerce today applauded congressional efforts to provide more tax fairness in health coverage by allowing a greater tax deduction for individuals who purchase their own health insurance.

"It is unfair to penalize taxpayers who purchase their own health insurance, yet provide a tax break to those who are self-employed or covered through work," said Kate Sullivan, Chamber director of health care policy. "People who do the right thing and obtain coverage for themselves and their dependents should be treated fairly."

Representatives Phil Crane (R-IL) and Sam Johnson (R-TX) have introduced the "Medical Cost Deduction Act" which gives individuals who purchase their own coverage the right to claim more of their medical expenses as a deduction on their income tax returns. Better tax treatment is needed because, according to the Chamber, individual health insurance can be much more expensive than group coverage through the workplace, and much more difficult to obtain. One out of eight people now purchase their own health plans and are precluded from any meaningful tax preference.

Self-employed individuals will be able to fully deduct their health insurance costs beginning next year. Employers that provide coverage may deduct those costs and workers covered by employer health plans also don't pay taxes on the value of those benefits. Further, many employees who participate in cafeteria-style benefits programs pay their premiums on a pre-tax basis.

"This proposal provides an important incentive for individual taxpayers without access to an employer health plan to obtain coverage and will make it more affordable for those who purchase it," noted Sullivan. "The tax deduction is particularly important for individuals who don't have retiree coverage and are not yet eligible for Medicare."

The U.S. Chamber of Commerce is the world's largest business federation representing more than three million businesses and organizations of every size, sector and region.

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