In response to the many calls, emails, inquiries —and to those who are unaware and oblivious to changing tax laws…
“…employers may no longer reimburse employees for, or directly pay, the cost of individual health insurance policy premiums and exclude such amounts from the employee’s gross income. Effective January 1, 2014, these “employer payment plans” must be paid with “after tax” dollars. The employer is only allowed to use “pre-tax” dollars to pay for health insurance premiums if the employer offers a group health insurance plan.”
1) If the employer reimburses an employee for health insurance premiums —TAXABLE INCOME.
2) If the employer pays a premium to the insurance company for employee’s individual health insurance —TAXABLE INCOME
3) If the employer offers a group health insurance plan, premiums may be paid with “pre-tax” dollars.
Employers-Church-Bookkeeper: If you have already processed payroll for this year, and included insurance reimbursements or payments directly for an employee’s individual health insurance policy —please review your payroll records to be sure these amounts have been entered as taxable income and appropriate taxes have been withheld —and make any adjustments necessary, including additional tax deposits for the first quarter.
Attached for your reading pleasure are two recent communications received which address this new tax law.