Workers in New York State with Employer-Sponsored Insurance Receive Nearly $23 Billion in Tax Subsidies

Knowledge of this significant public benefit should ease the perceived stigma that keeps the uninsured from enrolling in Medicaid or accepting public subsidies  

NEW YORK, NY—September 26, 2019—The uninsured who are eligible for Medicaid or health insurance subsidies offered under the Affordable Care Act often cite perceived stigma associated with signing up for public assistance programs as a reason for not enrolling. A HealthWatch report issued today by United Hospital Fund (UHF) suggests that they may feel differently if they understand that New Yorkers who are insured through their jobs—the “haves” of the health care system—receive nearly $23 billion in public assistance in the form of federal and state tax subsidies.

More than 156 million Americans receive health insurance through their employers, including some 9.6 million New Yorkers—about half the state’s residents. This employer-sponsored insurance has long received preferential tax treatment. The premiums paid by employers for workers’ health coverage are not subject to federal or state income tax, employers can deduct the premiums as a business expense, and premium contributions are not subject to the Federal Insurance Contributions Act (FICA) payroll tax that supports Medicare and Social Security. Also, workers who contribute to the cost of their premiums often make the payments pre-tax, before income and FICA taxes are assessed. 

The report, Easing the Stigma of Public Coverage: Workers with Health Coverage at Their Jobs Get Significant Government Aid Too, was supported by the Health Foundation for Western & Central New York.

“Although the employer tax exclusion is largely hidden, it is the largest U.S. tax expenditure by far, estimated to reach $287 billion this year,” said Peter Newell, director of UHF’s Health Insurance Project and author of the report. “For uninsured New Yorkers who were raised to be self-reliant and might be ashamed to accept help, the knowledge that fellow New Yorkers are reaping the benefit of nearly $23 billion in tax subsidies each year should ease any stigma associated with receiving public subsidies or benefits.” 

In discussion groups with uninsured people conducted as part of a report released earlier this year by UHF and the Health Foundation, Reaching the Five Percent: A Profile of Western and Central New Yorkers Without Health Coverage, participants cited the stigma associated with seeking public assistance as a barrier to enrolling in public programs like Medicaid, the Essential Plan, and Child Health Plus. As a result, UHF sought in this new report to cast the decision to accept financial help for coverage in a new light by examining the large and often-overlooked federal and state subsidies for coverage in the form of tax exclusions. 

“The earlier report we released with UHF made it clear that stigma can be a big barrier to health coverage,” said Nora OBrien-Suric, PhD, president of the Health Foundation. “We are excited to support an effort to reframe how we look at these issues, and I hope it will result in more of the uninsured in western and central New York gaining coverage.” 

The report lays out how the tax benefit from employer-sponsored insurance flows to fictitious employees with similar circumstances and salaries, revealing that the tax savings can range as high as $7,300 a year for a family of four with an annual income of $100,000 plus $16,898 contributed by their employer toward insurance premiums. That’s enough for a Buffalo resident to pay 12 months of premiums for a gold-level individual plan through the New York State of Health market place. 

“We need to reexamine attitudes around public benefits for health care,” said UHF president Anthony Shih, MD. “Public subsidies for employer-sponsored health insurance help millions of New Yorkers gain health coverage; likewise, there are other forms of public assistance with health coverage that are just as valid.”  

The report, Easing the Stigma of Public Coverage: Workers with Health Coverage at Their Jobs Get Significant Government Aid Too, can be downloaded at UHF’s website here.  

About United Hospital Fund
United Hospital Fund works to build a more effective health care system for every New Yorker. An independent, nonprofit organization, we analyze public policy to inform decision-makers, find common ground among diverse stakeholders, and develop and support innovative programs that improve the quality, accessibility, affordability, and experience of patient care. For more on our initiatives and programs please visit our website at and follow us on Twitter. 


Sept. 26, 2019
Health Insurance Project