Using a bonus system?

[Delta76]

Basically, however you write the check, it is part of payroll when you are providing it to the employee.

Much easier just to write group.

If the employer writes a check to the employees, its considered payroll and taxable to the employees. Unless their health care expenses exceed 7.5% of their AGI, none of it is deductible (this may change in the future and in my opinion, should).

The statement, "much easier to write group" isn't what I would suggest. Why not have the same employer put it into an HRA for his employees, if they use it great, if not, he keeps the money. Fairly simple and inexpensive. Even easier than group.

 

[slushhhpuppie]

Of course, I believe the employee would have to pay taxes on it even if they used it for health insurance. And of course, unless its a reimbursement for a business expense, the employer would have to pay payroll taxes on it as well.

Basically, however you write the check, it is part of payroll when you are providing it to the employee.

Much easier just to write group.

Dan

Nope.

A health care reimbursement stipend is NOT taxable to the employee as income, and NOT taxable to the employer as payroll.

It is a straight write-off for the employer.

My CPA has been doing this for years.

 

[slushhhpuppie]

Nothing wrong with running it through payroll and having ee pay taxes on it.

So instead of getting $300 a month for health insurance, the employees should have to pay taxes on it and make due with $225?

WOW... I wouldn't want to be your employee, lol....

 

[moonlightandmargaritas]

A health care reimbursement stipend is NOT taxable to the employee as income, and NOT taxable to the employer as payroll.

If this is NOT done through a Section 105 Health Reimbursement Arrangement, could you tell us where in the Internal Revenue Code this is?

 

[djs]

The statement, "much easier to write group" isn't what I would suggest. Why not have the same employer put it into an HRA for his employees, if they use it great, if not, he keeps the money. Fairly simple and inexpensive. Even easier than group.

Okay, I get the point about an HRA, though that isn't the same as providing health insurance. Is there other reasons you would not suggest using group?

I realize part of this becomes state specific, a large part is agent preference, and some of it is commissions on group are not as good as individual (at least up front). I write a lot of small group (under 10 employees) because it is VERY easy, rates are decent compared to individual, more feature rich policies, etc.

I have a benefit of health being almost a tertiary sale for me. I deal with the business liability, P&C, and then health, more as an all in one package, making the health insurance simply a retention tool for the rest of the package.

Dan

 

[moonlightandmargaritas]

Okay, I get the point about an HRA, though that isn't the same as providing health insurance. Is there other reasons you would not suggest using group?

IFP is usually 30-50% less than group.
IFP is non-cancellable (unless you don't pay the premium). Group IS cancellable.
IFP can't be singled out for premium increase due to claim activity.
IFP is portable for the employee. No COBRA concerns.
IFP is more "customizable".

 

[Delta76]

I would also add that the employer knows exactly what his cost will be and is in full control over what it becomes in the future.

 

[Delta76]

health care reimbursement stipend

Those words have me convinced this is through Sect. 105. However, if I'm wrong (I don't think I am), I would like to know how to do it the other way.

 

[djs]

IFP is usually 30-50% less than group.
IFP is non-cancellable (unless you don't pay the premium). Group IS cancellable.
IFP can't be singled out for premium increase due to claim activity.
IFP is portable for the employee. No COBRA concerns.
IFP is more "customizable".

Interesting

IFP is cancellable, at least to the extent that either the carrier is willing to walk from the state (which happens) or raise premiums to the point it doesn't work.

Singled out. True, but somewhat unrealistic. Look at the rate increases people get after 3 years on an IFP. Also, in California, group rates have pretty strict caps, regardless of claim activity.

Portable - Absolutely, just wish it was as good a coverage.

IFP is more 'customizable' - but it is difficult to get it to the benefit level of group.

The 30-50% less, I think is somewhat geography related. It is less, no doubt, especially if few claims are processed through the year. I had the misfortune (?) of working with an accountant on a policy recently. She ran through the numbers, assuming hitting max out of pocket. Group was a better buy for her anticipated usage. Due to other issues, I sold her an individual HSA, simply because her husband is ineligible for coverage, and she can still use the HSA benefits for him.

Dan

 

[NewHealthStrategies]

Funny how no one answered the QUESTION. The answer is YES, the employer can give his employees any amount he wants.... it's called a paycheck.

He can discriminate all he wants in regards to the question you asked.

If you're looking for the BEST way for an EMPLOYER to keep control over health insurance benefit dollars... then I would say an HRA is the very best.... with HSA's coming in the middle and following up in the rear, traditional HMO/.POS/PPO group plans.

There is a more and more movement towards ER's wanting to get out of providing group health and just giving people cash and wishing them luck.

There is some room for discussion about true cafeteria plans here, but rarely do they float for a small employer, which it seems is the case here.

Limited Med Plans, Critical Illness Plans and individual plans are emerging as viable discussion points to offset the rising deductibles and OOP max's that many employees are faced with today.

These once "scums" of the industry are becoming main stream...ie. SCR being b ought by Aetan.... Colonial owned by ???? huh....UNUM, is that right or AIG or somebody big,...... you get the point.

The only new IRC code that I see being used to great extent in group settings today is Sec 419 plan language changes, but not many health agents can navigate in those waters without being eaten by the financial sharks.

God's Speed........ maybe Obama will fix it all for us!!!! Good luck with that.