12.3 Small Business/Self-Employed/Other Business: Form W–2, FICA, Medicare, Tips, Employee Benefits
Can an employer pay for health care costs of an employee as a fringe
benefit?
Yes, generally an employer may pay for health care costs of an employee
as a nontaxable fringe benefit. Refer to Publication 535, Business
Expenses , for a complete discussion of employee benefit programs.
References:
If our company pays for the employee's health care costs directly
to the medical facility, as opposed to a reimbursement, is the employee benefit
reported on Form W-2 and subject to social security withholding?
Health care costs paid directly to the medical facility is normally a nontaxable
employee benefit provided that it is paid as part of an accident and health
plan. Refer to Publication 535, Business Expenses, for more information
on employee benefit programs.
References:
If an employer pays health insurance benefits for the employee and
dependents, are both the employee's and the dependent's benefits income to
the employee?
If an employer provides health insurance for the employees, the benefit
provided is generally not taxable to the employee. An employer can generally
deduct the cost of a group health plan on the "employee benefit programs"
line of their business income tax return.
Group health plan defined: This (including a self-insured plan) is a plan
that provides medical care to your employees, former employees, and their
spouses and dependents. The plan can provide care directly or through insurance,
reimbursement, or otherwise. The employer can exclude the cost of providing
group health insurance to an employee from his or her wages.
References:
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