USA Health Insurance Premium - Paid Monthly in Advance

[WesterlyEasterly]

Am I crazy? For an accrual basis taxpayer, health insurance premiums paid a month in advance are technically a prepaid insurance? I started at a new company, and they receive a bill (dated 1/15, due 2/1) for coverage period (bill service period 2/1-2/28), and it gets paid say 1/28. They have been posting the expense in the month paid and they also have run in the habit of making delayed payments, so some months may have two expenses and other $0. It’s driving me bonkers in terms of trend analysis.

so when technically should the expense be booked - bill/invoice date (month early) or billing period/coverage period? Am I crazy to encourage them to use prepaid expense line item to make sure we are always booking expense during the billing period/coverage period.

 

[kirby]

The expense should be booked per the month of coverage in the invoice.

Since you see some months with zero and some with double hopefully this is being caught during a pre-close review of income and expenses, where income and expenses in current month are compared to prior months. If this pre-close review is not being done now, then it needs to be added.

I suggest you note to the folks causing the delayed payments (typically HR?) that this can cause the insurance company to suspend medical coverage to the employees. Do so in a memo to back yourself up in case this hits the fan. When payment is not made and insurance company suspends coverage, some poor employee goes to emergency hospital and told "Sorry you have no insurance".

 

[ervinwelch]

The expense should be booked per the month of coverage in the invoice.

Since you see some months with zero and some with double hopefully this is being caught during a pre-close review of income and expenses, where income and expenses in current month are compared to prior months. If this pre-close review is not being done now, then it needs to be added.

I suggest you note to the folks causing the delayed payments (typically HR?) that this can cause the insurance company to suspend medical coverage to the employees. Do so in a memo to back yourself up in case this hits the fan. When payment is not made and insurance company suspends coverage, some poor employee goes to emergency hospital and told "Sorry you have no insurance".

Thanks, very helpful