Most people will be able to increase the amount of health coverage they have or use net tax refunds to pay some medical expenses.
Example 1 - Family person does not have employer paid health insurance. This person will receive a $5,000 tax credit that must be deposited into a health savings account. The money MUST be used to purchase health insurance, and/or for other medical or dental expenses. Net gain to the worker is $5,000
Example 2 - Family person in the 15 percent tax bracket has an employer sponsored plan that pays $ 12,000 of the $15,000 premium. The tax on that benefit will be $1,800 (12,000x15%). The family person will receive a $5,000 tax credit. Since $1,800 of that credit will be used to pay the additional tax on benefits. The taxpayer will net $3,200. This amount must be deposited into a health savings account and those proceeds must be used for medical purposes such as deductibles, co-payments, dental and other medical insurance such as dental or vision care. The 15 percent bracket stops at taxable income of $63,700. Net gain to the worker is $3,200.
Example 3 - Family person is in the 28 percent tax bracket. Otherwise the details are the same as in example 2. The tax on $12,000 in benefits will be $3,360. Consequently, the taxpayer must deposit the excess credit of $1,640 into a health savings account. The funds must be used for medical purposes as in example 2. The 28% bracket is taxable income of $128,500 to $195,850. Net gain to the worker is $1,640.
NOTE: When the Democrats say that the tax credit will "go directly to the insurer" they are referring to the provision that the excess of the $5,000 credit over the benefits tax must be deposited into a health savings account that can only be used to buy more insurance or pay other medical expenses. This assertion is a gross distortion of the McCain program. You must use the credit for medical purposes but that is the central intent of the credit—not an extra tax refund for consumer purchases like cars or appliances.
Preexisting conditions will be covered under the plan also. The Federal government will work with States to develop a Guaranteed Access Plan that would ensure access of these patients to health coverage in a special risk pool. There would be reasonable limits on premiums, and assistance would be available to Americans under a certain income level.
NOTE: Single people would receive a $2,500 tax credit. Otherwise the program will operate the same as for families.
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