I have read that a number of companies are planning to jettison their health plans and pay a monthly health care allowance to the employees. The employee would then obtain their health insurance on their respective state's health insurance exchange. Has anyone seen an interpretation of how these allowance payments will be treated for tax purposes (FIT, FICA, FUTA)? Thanks in advance for your reply.
Has anyone seen an interpretation of how these allowance payments will be treated for tax purposes (FIT, FICA, FUTA)? That would be ordinary wages just like any other paycheck. It would be subject to all of the usual withholdings and employer payroll taxes.--Peter
Wonder if it could be directly deposited into an HSA. Surely some enterprising lawyer has found a way to keep the employer deductibility/employee non-taxed status just like when the employer provides health insurance.
Wonder if it could be directly deposited into an HSA. Probably not. To put money into an HSA, you must have an HSA-qualified insurance policy. As far as I can tell, none of the insurance policies available under the ACA will be HSA-qualified.--Peter
On the other hand, if the employer doesn't offer a health plan anymore the employee may be eligible for tax credits depending on income. For lower wage employees that might still end up a better deal.
FYI. Not all employees who lose their company healthcare benefits will go into to the state exchanges. Some companies are providing access to health coverage via a "private exchange". This brief article explains: http://www.usatoday.com/story/money/personalfinance/2013/09/...Also, I have read that each state/or federal health exchange will have at least one HSA qualified healthcare plan. Sorry that I don't have a source for that. Perhaps a google search for "HSA and PPACA" or "HSA and Obamacare" would return a source. OR, perhaps using control F in the PPACA document itself would take one directly to the source for HSA info within the document. I know that I've seen it somewhere. That there will be an HSA qualified option, identified as such, on the state exchanges. ML
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