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Small Business Employee Benefits and HR Blog

Navigating the Taxes of Health Benefits in 2016

 

So you want to start offering health benefits, where do you begin? For most Navigating the Taxes of Health Benefits in 2016employers, the two key factors are cost and quality of benefit. 

This post will only cover the tax implications of different benefit options, but I recommend “Comparing Employee Health Benefits” if you want evaluate benefit quality.

Tax-Free Solutions

1. Use software to reimburse your employees for the individual health insurance they buy (there are a number of software services that take care of tax compliance for you).

2. Work with a broker to set up a group health plan for you and your employees.

3. Make contributions to your employees’ Health Savings Accounts (HSAs).

4. Offer a Flexible Spending Account (FSA) to employees and make contributions.

Taxable Solutions

When dollar contributions are subject to FICA, FUTA, and income taxes, employers can get a lot more creative in their benefits. This is a great opportunity to introduce stipends for insurance premiums, gym memberships, or other health programs. If you are not interested in establishing a formal benefits plan, the tax hit of a stipend program may be worth it for you.

Recommendation

Take the tax savings that are made available for employer-funded health benefits and create a program that is right for you. If you are interested in more information on how to do this, download our eBook featured below “How to Navigate Health Insurance for the Self-Employed and Small Business Owner.”

What questions do you have about the tax treatment of your ideal benefits program? Comment on our blog below!