does payment of health insurance premium by company = employee compensation


T

Travis

I am joining a startup that included coverage of my
healthcare costs as part of my offer. Due to the startup
nature of the company, I doubt there is a formal benefits
plan in place. I have an individual health insurance policy
that I will likely keep until a formal benefits plan is
operating that includes company health insurance.

Questions:
1) can the company pay my individual insurance premiums, and

2) if so, for tax purposes, is it considered employee
compensation or can it be considered a reimburseable business
expense?

Thanks in advance for your advise.

Travis
 
Last edited by a moderator:
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H

Herb Smith

Travis said:
I am joining a startup that included coverage of my
healthcare costs as part of my offer. Due to the startup
nature of the company, I doubt there is a formal benefits
plan in place. I have an individual health insurance policy
that I will likely keep until a formal benefits plan is
operating that includes company health insurance.

Questions:
1) can the company pay my individual insurance premiums, and
Yes

2) if so, for tax purposes, is it considered employee
compensation or can it be considered a reimburseable business
expense?
Employee compensation
 
Last edited by a moderator:
E

ed

Travis said:
I am joining a startup that included coverage of my
healthcare costs as part of my offer. Due to the startup
nature of the company, I doubt there is a formal benefits
plan in place. I have an individual health insurance policy
that I will likely keep until a formal benefits plan is
operating that includes company health insurance.

Questions:
1) can the company pay my individual insurance premiums, and
Yes the company can pay anything for you. It is either
deductible to them and not taxable to you (as a tax
deductible benefit), or it is not deductible to them and
taxable to you (as wages).
2) if so, for tax purposes, is it considered employee
compensation or can it be considered a reimburseable business
expense?
Paying your health insurance is NOT considered employee
compensation, it is a tax-free health insurance benefit to
you and therefor deductible by the corporation.
 
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T

TRB

Travis said:
I am joining a startup that included coverage of my
healthcare costs as part of my offer. Due to the startup
nature of the company, I doubt there is a formal benefits
plan in place. I have an individual health insurance policy
that I will likely keep until a formal benefits plan is
operating that includes company health insurance.

Questions:
1) can the company pay my individual insurance premiums, and

2) if so, for tax purposes, is it considered employee
compensation or can it be considered a reimburseable business
expense?
I located the answer to my own question in IRS publication
15 - "Employer's Tax Guide". As per pub 15: "If you pay the
cost of an accident or health insurance plan for your
employees, that may include an employee's spouse and
dependents, your payments are not wages and are not subject
to social security, Medicare, and FUTA taxes, or federal
income tax withholding."
 
Last edited by a moderator:

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