As a small business, there are different ways to contribute to employee health insurance. For example, the company can offer a group health insurance coverage reimbursement of individual health insurance , or a health insurance allowance.
The new health benefit options available, I often get questions vs. taxable health insurance tax free. To answer this common question, let's look at situations where the health insurance contributions are vs. taxable tax free.
Tax-Free Health Insurance Contributions
Tax-Free Health Insurance Contributions Where contributions to health insurance are now deductible and tax-free employee tax, this means that the company has a formal health care plan in place.
health insurance plans or tax-common health benefits include contributions to:
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Group Medicare premiums
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medical reimbursement plans, as health care reimbursement plans (HRPS) or health reimbursement arrangements (HRA)
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health savings accounts (HSA)
More information on the health benefits of tax-free employees can be found in IRS publication 15-B.
taxable health insurance contributions
In some cases, employer contributions to health "insurance employees may be taxable. For example, if the company offers its employees a lump sum ( "allocation") to purchase health insurance money is considered taxable income
Tip -. Employers should take care not to offer an employer payment plan , in which the direct payment or reimbursement is made to employees for health insurance . Why? New sanctions under the Affordable Care Act may apply. Instead, employers should use a repayment plan conforms to contribute tax free to employees of the health insurance premiums
Related :. Graphics - Are we pay employees? Health Insurance Correctly
Conclusion
Internal Revenue Service (IRS) allows certain contributions to health care for employees and the 'deductible business tax free tax. Generally, if the company has a formal health plan contributions are tax efficient. If the company has a more casual arrangement, contributions are probably considered taxable income.
Further reading
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FAQ - Franchise insurance premiums are they tax
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FAQ - What benefits are tax free
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FAQ - Can we give employees money for health insurance
What questions do you have on vs. contributions or insurance reimbursements taxable tax free? ? Leave a comment below and we'll help you answer them.
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