The Internet health insurance exchange on Oct. 21, 2013.

The Internet health insurance exchange on Oct. 21, 2013. Credit: Getty Images

For 70 years, group health insurance has enjoyed a unique tax benefit. Premiums were tax deductible for the corporation and not taxable to the employee. Thanks to the Affordable Care Act, that tax break is coming to an end ["Insurance canceled," News, Oct. 30].

If the employer abolishes the group plan and elects to provide individual coverage to each employee via the exchange, then any money contributed by the employer will be considered taxable income to the employee.

If the employer continues to maintain a group plan via the exchange, then premium payments will not be considered taxable income as long as the average income of all employees does not exceed $50,000 annually. In this case, the employer may be eligible for a tax credit.

As the years pass, more small companies will pass this $50,000 mark and no longer qualify for group coverage on the exchange. Or the employer can maintain group coverage outside the exchange, and both the employer and employee will keep their current tax advantages.

Kenneth Heard, Smithtown

Editor's note: The writer is a life insurance underwriter.


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