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Government Proposes $500,000 Compensation Deduction Limit Paid by Health Insurance Providers

If your company receives federal money, watch out!  CHiPs are essentially capped from deducting any compensation to any executive over $500,000.  It doesn't’t stop them from paying $500,000, but the cost of doing so just went up. Why $500,000? It’s close enough to what our President makes to call it a cut off. This rule applies to government contractors as well.

In short, government regulators believe that if you are dealing with the government, you should fit under their pay schedule. The only problem is that:

  1. The President will make approximately $100mm post presidency (conservative estimate).
  2. The President doesn't’t pay for any of his perks, which are ten times what he makes.
  3. The President will receive a guaranteed benefit for the rest of his life in a pension fund and health care.
  4. Government legislators also receive the same guaranteed benefit for the rest of their lives in a pension fund and health care.

The government is looking for money, and executive compensation is a seemingly painless way to find it.  As the government continues to overspend, this $500,000 compensation deduction cap will continue to grow in it’s application.


This blog post was written by Chris Crawford, COO and Executive Director of Longnecker & Associates.

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