|Senator Jeff Bingaman of New Mexico and Sen. Craig Thomas of Wyoming introduced the Equity for Our Nation's Self-Employed Act of 2004 (S. 2433) on May 18. This bill is the Senate version of the Self-Employed Health Care Affordability Act of 2003 (H.R. 1873), which was introduced in the House of Representatives on April 30, 2003. Both bills were written to allow the self-employed to pay for their health insurance premiums with funds that are exempt from the FICA (Social Security and Medicare) tax. |
The current tax code permits corporations to deduct health insurance premiums as a business expense and to forgo FICA taxes on those costs. The self-employed are not allowed this same deduction, however, and are therefore required to pay an additional 15.3 percent self-employment tax on their premiums. The self-employed are the only segment of the business community that must pay this extra tax on health insurance.
A 2003 study by the Kaiser Family Foundation found the self-employed pay an average of $9,068 in health insurance premiums annually for family coverage. If S. 2433 and H.R. 1873 pass, the self-employed will save an average of $1,387 in taxes paid on those premiums each year.
In November 2003, the AVMA Executive Board voted to designate the Self-Employed Health Care Affordability Act of 2003 as legislation for which the Association should actively pursue passage. The AVMA has joined a group of 30 other national organizations in the Coalition Supporting Equity for Our Nation's Self-Employed. At this time, H.R 1873 has 57 co-sponsors. AVMA members are encouraged to contact their members of Congress and request that they co-sponsor H.R. 1873 and S. 2433.