Every tax bracket gets a 10% (i.e., if you are paying 10%, now you pay 11%) increase, except the lowest one.
Everyone that files a tax return gets a quarterly bonus drawn from the 10% pool of income taxes of the bracket above them (except the uppermost bracket).
You can do whatever you want with the bonus, buy health insurance, eat fancy food, drink booze, invest it, give it to charity, whatever.
This accomplishes a couple things:
One: it gives an incentive for the lower classes to get at least one legit job so they can get the bonus check. It disincentives illegal labor and encourages payment of taxes.
Two: It leverages the free market to optimize social services. I can choose to buy whichever medical/dental plan I want with the bonus, for example.
Three: It improves the economy, by keeping wealth circulating domestically; as opposed to going overseas. The lower classes will tend to spend their bonuses pretty quickly.