Replies

1. 
   Schelling | Jul 12, 2002 01:58pm | #1

   I don't understand your tax angle. If you pay for your employees insurance, it is not taxable to them and is tax deductible for you and would reduce your gross payroll.

   We pay some of employees insurance, others work extra hours to cover their families and others take higher pay in lieu of insurance. Their choice and no complaints except that the insurance isn't the greatest. It is what we can afford.

2. 
   BossHog | Jul 12, 2002 03:42pm | #2

   The only way you can keep everybody happy about insurance is to pay 100% of it your self and eat the cost. Since that isn't really practical, you're bound to piss a few off.

   As for your tax angle, why not talk to an accountant? You need a formal opinion, not just a few opinions thrown around on a message board.

   sounds like a good idea, though. I also like the idea of paying guys a "tool allowance" as part of their wages, for the same reason.

   Five days a week my body is a temple. The other two, it's an amusement park.

3. 
   JeffBuck | Jul 13, 2002 02:16am | #3

   Your idea sounds like a "Cafeteria Plan" that the last company I worked for used. Their selling point to the employees was......all benefits come out first.......then the income taxes are based on the lower hourly rates......I saw their angle as lowering the comp rates....less burden.

   A carp at $15/hr......would pay 2.75 for health insurance......and the pay stub would show an hourly rate of $12.25....then the fed/state/local taxes were taken from that amount.

   They handled the health ins that same way as your plan......they'd cover the employee......employee picks up the extra for wife and kids.........when I was laid off and had the option to extend the coverage for 3 months...by paying the full monthly rate to them directly......I saw how little they were kicking in......but, then again.......I was given the chance to buy into a group plan....so hwo's to bitch?

   If you are just looking into this for the first time......chack out the local Chamber of Commerce...as well as all the Builders Associations......I was able to join the Chamber and get lower rates as compared to all the local/national builder associations. I was also able to qualify as a "group" of one.....sole prop.....no employees.......then add the family. Jeff

      She's exotic ,but not foreign, like an old Cadillac......she's a knockout!

1. 
   brownbagg | Jul 13, 2002 04:41pm | #4

   Thats the way my company has been for years. No since hurting the single guy by paying for family coverages. We have the cafertirra (sp) plan too, and its great. Blue cross of Fla.  If you pay family, single complain. If pay single, family complain. Beside you did not tell that carp to have six kids, why pay yourself for him not using condoms.

   Pay single before tax let the employees pick up family, the differents before tax is not noticeable because it drops the tax bracket. Also all you can do before tax drops the employer matching liability tax payment to IRS. More profit.

   I hate to say it but thats how it works

4. 
   Cole | Jul 13, 2002 06:23pm | #5

   By offering to pay for just your employees, you are doing it right.  The only places I see around here that provide 100% benefits to employees and their families are the govt. entities.  And guess who's really paying those benefits.  Not the govt.  Look at it this way, if you don't offer insurance at all, they need to procure it on their own.  At least they can defer part of the cost by removing themselves from a policy.  If they choose, they can get another policy for their families.  The fact that you are willling to pay 100% of the employees premium speaks worlds for you.  My former employer would only cover 50% and we had 30 guys.  Insurance is not cheap.

   cole

   Cole Dean

   Dean Contracting

5. 
   homewrite | Jul 13, 2002 06:38pm | #6

   The IRS recently issued guidelines for Health Reimbursement Arrangements. These guidelines are available as Notice 2002-45 at the IRS' website.

   Health Reimbursement Arrangements are basically tax favored individual medical savings accounts. Cash contributions to the are deductible as an expens to the employer and are not counted as income to the employee.  Any monies in them may be used at the discretion of the employee for medical expenses, including the purchase of health insurance. Minor health expenses are paid directly to the providers of the service from the cash in the account. Any unused cash is carried forward to subsequent years. The employee is given an incentive to shop for a good price for medical services because the money being disbursed is owned by the employee. The cash balance in the account can also earn tax deferred interest. At retirement, the employee can keep the cash balance in the account for medical purposes not covered by insurance, or he can take the money out and pay tax on it as if he were taking it out of an IRA.

   As I understand it, this arrangement has to be set up by a corporation for the employees of the corporation. I do  not believe it would be available to the partners in a partnership; although, it may be available to the employees of the partnership. This is so new that many of the details are not well know by people outside the IRS. Contact them according to the information available in the cited Notice 2002-45.

6. 
   homewrite | Jul 13, 2002 11:29pm | #7

   I incorrectly indicated that the info on Health Reimbursement Arrangements was on the IRS' website. It is actually at http://www.ustreas.gov/press/releases/po3204.htm

1. 
   FrameBoss | Jul 16, 2002 12:15am | #8

   thanks for the site info . Any little bit helps I'll be pay a visit to to treasurey dep site reall soon!

7. 
   bobl | Jul 16, 2002 01:55am | #9

   http://www.bizoffice.com/library/files/meb.txt

   http://www.bizoffice.com/library/files/obd10.txt

   bobl          Volo Non Voleo      Joe's cheat sheet

   
   

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   Edited 7/15/2002 6:57:52 PM ET by bobl