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Research & Analysis by Sveta Milusheva
Effects of Employer-Sponsored Health Insurance Costs on Social Security Taxable Wages
from Social Security Bulletin, Vol. 73, No. 1 (released February 2013)
The rising cost of employer contributions for employee health insurance reduces the percentage of compensation subject to Social Security payroll taxes. This article uses the Medical Expenditure Panel Survey to analyze trends in the cost of employer health insurance contributions relative to money wages and total compensation. The analysis shows how increasing employer health insurance premium costs from 1996 to 2008 reduced the percentage of compensation subject to payroll taxes, and it predicts the effects of health insurance reform on taxable compensation.