The tax treatment of health insurance and employment-based health benefits.

• Tax treatment of health benefits—Various proposals have been made to change the tax treatment of health coverage, which currently is tax free to both employers and workers. Proponents of these changes argue, among other things, that current tax rules are unfair and contribute to unnecessary spending for health care. This Issue Brief examines changes that policymakers are discussing, explores the history of tax laws concerning the tax treatment of health benefits and the cost to the federal government in forgone taxes because of these laws, and examines some the advantages and disadvantages that could result from the proposed changes.