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January 29, 2007
HP-238
Making Health Insurance Affordable for More Americans
Examples under President Bush's Standard Deduction Health Insurance Plan
Example 1: An uninsured family of four
Note: All figures are for 2009, the first year the policy is in effect.
Family #1
• A family of four earns $60,000 in total compensation, but all of it comes in the form of wages, i.e.
they do not get health insurance through their employer.
• On the non-group market, they would pay $5,100 for an average policy, and $4,100 for a basic lowcost
policy.1
• Under current law, the family receives no tax benefit for purchasing health insurance and is treated
unfairly relative to those workers who receive health care through their employer.
President's Proposal:
• If this family buys health insurance, they deduct $15,000, which reduces their taxable income from
$60,000 to $45,000. This deduction lowers their taxes (income and payroll) by $4,545.
• If this family bought an average policy ($5,100), the cost of the insurance would, in effect, drop to
$555 ($5,100-$4,545=$555).
• If this same family bought the basic low-cost policy ($4,100), the family would get back $445
($4,100-$4,545= –$445); they end up with $445 more than if they remain uninsured!
1 The parents of the two children are assumed to be 35 years old in 2009.
REPORTS