>The “Self- Employed Health Care Affordability Act,” co-sponsored by Representatives Donald Manzullo (R-Illinois) and Nydia Velazquez (D-New York), and recently introduced in the United States House of Representatives Small Business Committee (which Manzullo chairs, and on which Velazquez is the ranking Democratic member) , seeks to eliminate the requirement that self-employed individuals claim health insurance premiums when determining self-employment tax, according to t he National Association for the Self-Employed (NASE) news release.
>Under the current tax code requirements, self-employed individuals are unable to deduct health insurance premiums as a business expense and are required to pay an additional 15.3% self-employment tax on these expenses. This stands in contrast to larger corporations that do not have to pay the extra taxes on FICA (Social Security and Medicare) expenses.
>Therefore, if a self-employed individual pays $7,954 annually in health insurance premiums, they would owe an additional $1,216 in taxes on this amount, according to Robert Hughes, President of the NASE, which supports the measure.
“At a time when the price of health insurance premiums is skyrocketing – increasing an average of 13% last year for the self-employed – this inequality means the difference between having and not having health insurance,” said Hughes. “These added costs are a key reason why the self- employed and small-business people are the majority of those without health insurance today.”