Are Employer Paid Health Benefits Taxable 2014?

Christie Jahn's Profile

Are Employer Paid Health Benefits Taxable 2014?In Jan 2014, as a result of Obama Care; employer paid health benefits will be taxable as a fringe benefit. I'm looking at it from the perspective of increased tax brackets possibly? Taxing people for something that is currently a benefit? I'm curious what your thoughts are about this?

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Christie,

On the question of are employer paid health benefits taxable income, could you provide a link or some more information on where you read this? I can't find anything indicating that employer paid health benefits were going to lose their pre-tax status.

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Christie makes a great point.... are employer paid health benefits taxable?

Here's a great free resource here on Proformative:


"Affordable Care Act Tax Provisions"

http://www.proformative.com/resources/affordable-care-act-tax-provisions


Enjoy! Best... Sarah

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At this point, there is no law on the books that makes employer provided health insurance taxable in 2014 - unless you are "driving" a Cadillac plan. But it would not surprise me if one day our Government decides to tax this benefit. It seems to me that the requirement to report its value on W-2's is the first step in that process.

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I agree. Getting employers to put this amount on the W-2 isn't to show the employees what their employer pays for their health insurance. It is to eventually make the benefit taxable.

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I heard it at meeting I was at; people discussing the changes in Obama Care and how it will impact companies. I mentioned that we fully pay for our employee's healthcare so I wasn't that worried about how it will impact us as a company and they (these being HR / Accounting Folks) mentioned that we have to report the value on the W2's and our employee's will have to show it as income on their 2014 taxes. Looking for more information to back this up; I asked our Insurance Agent who said that is what he understands as well. I will ask him to send me some literature which I will share if I can.

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I also heard that employer provided health benefits would be taxed but fortunately I knew enough to question my "source". My understanding is the same as Robert's above. I don't know if the taxation rumor was an innocent misunderstanding of the fact that W-2 reporting does not necessarily equal taxation or if it was a calculated misrepresentation by the opposition (of which I am one but certainly both sides like to spin). I will point out though that 401K contributions have been reported on W-2s for years and those earnings are not (yet) taxed.

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Christie-
It is my understanding that in 2018 high cost health plans are subject to a 40% excise tax. This is referred to a tax on Cadillac plans. High cost health plans are defined as above 10,200 for single coverage and 27,500 for family coverage.

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The "Cadillac" tax on employers is indeed scheduled for 2018. Two taxes/fees do start in 2014; a tax on insurance premiums charged by insurance companies - sure to be passed on - and a fee of $63 per employee insured, including insured under self insured administrative arrangements.

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At a networking breakfast yesterday, our speaker on healthcare indicated that the main reason, for now, is to track what these costs are so the Feds can determine if the "Cadillac" threshold is accurate or not. It's all about raising tax revenues. If the threshold is too high, then tax revenues will be too low. The political hot potato around this, per our speaker, is that many union benefit plans could fall foul of the "Cadillac" rule if the threshold is too low.

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I have asked my agent for a resource so if he provides me something I will share, but it sounds like it could be rumor. We don't even have to report these benefits unless we have more than 250 employee's in 2014 so it actually makes more sense that it's a monitoring piece. Thanks for the feedback!

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