I got an explanation on health insurance from my mother-in-law. She tells me that “anything taxable to the employee is generally taxable to the employer”, which I guess I knew but didn’t really think about, since I’ve never been the employer. So, if health insurance is not taxable, then it becomes a relatively cheap benefit for the employer to offer.
I still think saying that it “encourages employers to offer insurance” is a little strong. It encourages them to offer it instead of other benefits that might be taxable, but the real “encouragement” is that (another thing I learned from my mother-in-law) most states require it by law.
Certainly it seems likely that fewer businesses would offer health insurance if they had to pay taxes on the money. So I’m still not exactly clear on who this proposal is supposed to help. I’ve sent another email to my mother-in-law seeking further guidance, but I believe she’s out of town for the weekend. And I’m out of town starting Monday, so we may all have to wait.