Looking for someone who knows the IRS rules in detail as they relate to this: I have an employee who eligible for medical insurance thru our plan. He has his own plan that he would like to keep, and with good reason–he has a dependent on it as well as himself, and he may or may not stay with my crew forever. What I’d like to do is write a check to his insurer each month, and keep a copy of the bill they sent him as backup.
My tax person says this is a gray area but that he has other clients who do it. A few others have said that I might become liable for employment taxes on the amounts paid, plus penalties and interest of course.
What do you know about this?
Replies
Did he mention anything about setting up a CAFE plan?
FKA Blue (eyeddevil)
You would be better off bumping his salary to cover the expense and have him sign off on medical benefits.
how?
So you can pay his taxes,comp,unemp ins on top of health insurance?
How? You take the cost of his insurance then add in all the extras till he gets a salary increase to pay the insurance himself... and you get him to sign off on any and all company healthcare bennies in the future.
And yes, someone has to pay the taxes and insurance.... it's the law.... and it's deductable.
Why on earth would you pay payroll taxes, unemp. and work comp on health care?
Edited 12/4/2007 5:27 pm ET by redeyedfly
Because if the employee was worth it, it's all deductible and you'd have zero exposure to do it for anyone else on the payroll. When he is fired or quits it's done with... end of story.
Otherwise every employee from here on, has the ability to lug along with them their insurance of choice for you to pay, with you having no ability to say no.
Are you asking these questions because you don't know or do you have some different version how the real world of employment works?
I'm asking these questions because it seems you don't know.
He already has a health care plan.Your suggestion makes no sense and would cost way more than it should.
Edited 12/4/2007 9:03 pm ET by redeyedfly
The employer aleady has a plan in place. The employee has a different plan which he wishes to maintain.
Adopting the new plan (employees), by making the payments, means you will now have to make it available to all eligible employees. That's the way it works here in the good old US of A.
If you don't have a CPA and Lawyer you need one... if you do... you need to fire them.
Yeah, I just got off a conference call with both of them. I thought I should pay some consulting fees to both of them to answer a message board post for someone else.You go ahead and pay the burden on top of your health care. It's not my money. Bad form to suggest someone else pisses theirs away. Since health insurance is soo cheap, you might as well add your labor burden to it. That sure is the best plan.Jackass.