California Health Insurance Fairness Act: personal income tax: deduction: medical insurance.
Impact
By reducing the threshold for tax deductions related to medical expenses, AB 782 would notably benefit individuals and families purchasing health insurance directly rather than through an employer. The bill intends to level the playing field between those insured via employment and those who buy their insurance out-of-pocket, thereby increasing the affordability of health coverage for the approximately 1.2 million Californians who do not receive employer-paid health insurance. This legislative change aligns with the federal Affordable Care Act's objectives to increase insurance coverage amongst the population.
Summary
Assembly Bill 782, known as the California Health Insurance Fairness Act, was introduced to amend Section 17072 of the Revenue and Taxation Code. The bill aims to provide a deduction from gross income under the Personal Income Tax Law for amounts spent on medical insurance and transportation essential to medical care. This bill seeks to eliminate the high threshold of 7.5% of adjusted gross income, making medical expenses, including insurance, more accessible for taxpayers who don’t benefit from employer-paid insurance.
Contention
However, discussions around this bill may involve contention surrounding how it interacts with federal tax law and the potential cost implications for state revenue. There may also be debates concerning the fairness of providing tax relief primarily to those purchasing individual insurance, especially when a significant portion of the population receives employer-sponsored coverage without tax obligations on their premium costs. Thus, while proponents advocate for greater health insurance equity, critics might express concerns about the financial impact on the state budget.