Are payroll health insurance premiums taxable?
Payroll health insurance premiums are subject to tax deductions.
The premiums that you pay for your health insurance is a tax-deductible expense, whether this is bought based on an employer-sponsored plan or if it is bought from the individual market by a self-employed individual.
But for payroll deductions (for employer-sponsored plans) that are meant to pay health insurance premiums to be tax-free, the company is required to offer a cafeteria plan to their employees. A cafeteria plan enables the employee to decide whether to get additional health insurance benefits in exchange for parting with a portion of his pre-tax salary.
With the health care bill, the employer of a small-sized firm may get tax-breaks to help the company pay for the insurance. By this we mean firms having 50 or less full-time employees. The tax credit will be worth up to 35% of the premiums paid f the firm is a for-profit firm. Non-profit firms get up to 25% in tax credits.
Also, employers with more than 50 full-time employees will be fined if they do not offer health insurance to their employees. So, having health insurance would actually mean savings for the company, not just because the premiums are tax deductible but also because employers get to enjoy tax savings resulting from it. This will be fully implemented in the year 2014.
| Not a bit | Very useful |
- I earn some $300,000 annually and I also enjoy a great health plan given by my employer. How will this be affected by the health care bill?
- Will I be required to buy health insurance?
- How long can my child remain on my health insurance?
- Can an employer deny an employee health insurance?
- How will health care reform affect part-time workers?
- How will Obama's health care reform affect mental health services?
- What are the benefits of the health care reform for those who have insurance?
- How will health care reform affect Medicare and the elderly?
- What do I need to know about Health Care Reform?
- I am on active military duty and I fear that my TRICARE coverage will be affected? Will it?
- What impact will the health reform law be on veteran’s coverage?
- Will the bill affect Medigap? Will Medigap be still available?
- Is medical malpractice affected by the health insurance reform bill?
- When will the health insurance reform bill be effective?
- Won’t the benefits in the health care reform result in higher taxes?
- How will the health care reform law affect health savings accounts (HSA)?
- Will all the changes in the health care reform result in an increase in my health care premiums?
- Will the health care reform provide me with coverage to see a psychiatrist or a therapist?
- How will the new health care bill affect access to maternity benefits?
- Will the new health care bill allow us to keep our COBRA plan?