Health coverage- taxable or non taxable?

[jIM_Ohio]

Is the health insurance premiums you pay (for coverage thru your employer) taken out of your paychecks pre tax or post tax?

[SnoopyCool]

Can't help you here. Back when we had employment to speak of, the employer paid our premium as part of DHs raise.

[disneysteve]

Mine is pre-tax, I believe.

[FrugalFish]

Pre-tax

[Caoineag]

Mine is pretax and so is my HSA contributions that I do (think cafeteria plan).

[sweeps]

Pretax.

[arthurb999]

Generally it's pretax.

There are some cases where it can be post tax... if the employer doesn't use uniform coverages/decutcions... example gives execs better coverage for free and gives regualr employees something different.

[LivingAlmostLarge]

pretax. But you should ask people how much do they pay and how much the employers pay?

My DH pays $40/pay period = $1040/year or $86/month for him and I. The employer pays over 90% of the cost. We have a ridiculously great plan.

[jIM_Ohio]

Thank you for responses thus far- I was expecting pre-tax to be the answer. I am trying to understand what gets "lowered" when health care is paid pre-tax.

I thought it was pre-tax, then after reviewing my return this year (first year with HDHP/HSA) I am questioning what is pre-tax and what that really means.

Does your health benefit lower your gross income (which is what SS and medicare are based on?). Probably not, but confirm for me I am not crazy.

Does your health benefit reduce the gross pay (after those government handouts above) on your W-2? If it is pre-tax this would need to be true- meaning your health care would need to lower gross pay just like a 401k does. Are these premiums reported on a W-2?

I am asking because my taxable income with my HSA is much lower than it was when we used "normal" insurance- because the HSA info is input on tax return I see visibly the savings I am getting.

If you can imagine this- only about 57% of my income is even subject to tax- not sure what the effective tax rate will be (for me) but I have close to $50,000 in deductions thanks to a 401k, HSA, mortgage and a few other smaller things.

How does a pre-tax health care premium get reflected on a W-2 (which box 1-3 or 5) is lower?

[noppenbd]

Here is my understanding. Boxes 3 and 5 (SS and Medicare wages) are usually the same, and are basically gross pay minus pretax benefits (like health, dental, STD premiums) and minus FSA or HSA contributions. Boxes 3 and 5 represent the amounts you paid SS & Medicare taxes on over the year, respectively. Box 1 is your taxable income for IRS purposes, and is essentially box 3 minus deductible retirement contributions. Box 16 (state income) is usually the same as box 1.

Here is the logic behind it. You don't pay federal or state income tax on deductible retirement contributions (401k) when you earn it, you pay on it when you withdraw it. But you still have to pay SS tax on it when you earn it.

You don't pay federal, state, SS, or medicare taxes on pretax benefits (premiums) or HSA/FSA contributions.

[sweeps]

My health premiums, dental premiums, and HSA contributions come out not just free of income taxes but also FICA and Medicare taxes.

The amount reported on my W-2 is net of those items. If I look at my last pay stub for the year, my gross income is about $8,000 higher than the "Social security wages" on my W-2. (And much higher than my "Wages, tips, other comp." due to 401k contributions.)

[Goldy1]

WEll my dh has been laid off 2 months but he worked at his last employer 8 years. We had our insurance totally paid for until the last 3 years where we generally paid about $70 every 2 weeks from his check for both of us.

WE had the choice of 2 plans, one being what we chose;a lower priced ppo, or to pay a lot more and get traditional blue cross which we didnt' need being generally healthy.

This amount of money which was done as a percent of his income was taken out AFTER taxes. It was NOT PRETAX. It was after taxes which I always wondered why. I never asked anyone but I assume it was for some benefit to the company. So it ended up costing us more money being after tax, but we weren't complaining. I assumed it was b/c if it was done post tax it would be more payroll for them to deduct on thier taxes, but I have no clue and it's not an issue now as he doesn't work there and NO ONE else I know pays after tax anywhere. lol

[MonkeyMama]

Actually, it depends.

I do a lot of payroll consulting for small business. A majority of their employees' health insurance is deducted after tax. IT has to be set up a certain way to be deductible. (I get the impression from this thread that most large companies go the pre tax route; but they have more means to implement and administer the tax-deductible plans).

So, um, just to point out this is more of a HR question (to your employer). Every company is different.

P.S. I would never complain about employer-paid health insurance, personally. The portion they pay is a tax-free benefit. HEalth Insurance is nothing I have ever really been offered in my field. So I'd take it, tax free or not. WOuld save me thousands!

[greghanss]

I had 2 plans and paid aprox. 80$. As I know , they are taxable.