Taxes on health care benefits


Q: I have heard that the new health care law requires all federal employees to pay income tax on the government-paid portion of our heath care plan’s cost. Is this true?

A: No, it isn’t true. What is true is that in 2018, a 40 percent tax will be levied on health insurance plans that cost more than $10,200 per individual or $27,500 per family. The tax will be on any coverage that exceeds the limit. Those figures will be based on the combined contributions of enrollees and the government, and the expense will likely be passed on to consumers. To get you accustomed to what those total costs are, beginning in 2011 they will be included on W-2 forms for employees and 1099 forms for retirees.


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

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