Health Insurance payments. What is taxable income?

Dec 19, 2013 1 Replies

First reply

D. Stussy

My situation is as follows: (2013) We received health insurance through my employer. We paid 20% of the cost back to my employer post-tax. The employer paid the full premium to the insurance company. (2014) We are receiving health insurance through my wife's employer. We pay…

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My situation is as follows: (2013) We received health insurance through my employer. We paid 20% of the cost back to my employer post-tax. The employer paid the full premium to the insurance company.



(2014) We are receiving health insurance through my wife's employer. We pay 20% of the cost back to her employer. The employer takes this from her check pre-tax. The employer pay the full premium to the insurance company. However, my employer is reimbursing me that 20 percent that we send to her employer.


In this scenario what do I report as taxable income? Is there a better way to handle this?



Thanks.


(2014) We are receiving health insurance through my wife's employer. We pay 20% of the cost back to her employer. The employer takes this from her check pre-tax. The employer pay the full premium to the insurance company. However, my employer is reimbursing me that 20 percent that we send to her employer.

In this scenario what do I report as taxable income? Is there a better way to handle this?

===========As in both cases, the amounts get reported to you via your form W-2, the employers are already telling you what is taxable and what is not.

Assuming that your question is: Are they reporting it correctly?

In 2013: You have a medical deduction for the 20% cost of your insurance that you paid as it is post-tax. The 80% provided by your employer (under their cafeteria plan) is not taxable to you. The employer takes the deduction for the 80% amount.

In 2014: Your wife has zero to report or deduct as your share of the premium is pre-tax. Your employer should be adding the 20% it is reimbursing you to your wages for income tax purposes. Whether this amount is also compensation for FICA purposes (assuming you haven't already hit the SS limit) I have not looked into, but I would suspect not (because it is not compensation for work but a reimbursement).

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