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Author: kgood16 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121144  
Subject: question on health insurance Date: 10/7/2010 2:02 PM
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Hi, I'm not sure where to post this, so please excuse if this is the wrong board.

Is an employer allowed to offer health insurance to outside contractors? Or can they only offer it to employees? I'm not sure if this would be a tax issue or if it's up the the health insurance company.

Thanks,
Kathy
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Author: foo1bar Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111190 of 121144
Subject: Re: question on health insurance Date: 10/7/2010 4:41 PM
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Is an employer allowed to offer health insurance to outside contractors? Or can they only offer it to employees?

I haven't heard of any employer offering health insurance to an outside contractor.

If I were looking at such a thing, I'd wonder about whether that would be treating the person as an employee, instead of a contractor. And I'd talk to a lawyer who specializes in Human Resources to find out.

Might we ask why you're asking? are you the employer or the contractor?

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Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111191 of 121144
Subject: Re: question on health insurance Date: 10/7/2010 5:50 PM
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Part of the employee vs contractor test is "type of relationship". Employees generally get benefits, while contractors do not. I've also never heard of any contractors getting benefits.

WRJ

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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111192 of 121144
Subject: Re: question on health insurance Date: 10/7/2010 6:10 PM
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"Part of the employee vs contractor test is "type of relationship". Employees generally get benefits, while contractors do not. I've also never heard of any contractors getting benefits."

You aren't likely to hear of any benefits, either. Those who hire contractors are very careful not to show any semblance of an employer-employee relationship. or they could get nailed for withholding tax and FICA. They may well give the contracted person a free place to stay, a daily food allowance, a rental car, and pay their airfare to the work site and home again--but not paid time off, and most assuredly not health insurance.

Years back I tried to form a group comprising those who were independent contractors for an entity that worked with a lot of them, so that group could present itself to Blue Cross as a group, where each member of the group could pay for his/her own health insurance. No dice. If you are self-employed and work as a contractor, you are presumed to be high-risk and health insurance is a major problem.

Best wishes, Chris

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Author: foo1bar Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111193 of 121144
Subject: Re: question on health insurance Date: 10/7/2010 7:09 PM
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Years back I tried to form a group comprising those who were independent contractors for an entity that worked with a lot of them, so that group could present itself to Blue Cross as a group, where each member of the group could pay for his/her own health insurance. No dice. If you are self-employed and work as a contractor, you are presumed to be high-risk and health insurance is a major problem.

I believe there are companies that do just that for Programmer contractors - I have a friend that was an "employee" of such a company. (He was an employee in all the legal terms, they paid FICA, etc, but he was responsible for finding his own contracts, etc.)

Also there are professional organizations that offer health insurance for their members, presumably for those who are contractors or in a small business that doesn't offer health ins. (IEEE being one that I know of - however I haven't tried to get health ins. through them)

But this is going a bit off-topic.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111194 of 121144
Subject: Re: question on health insurance Date: 10/7/2010 7:22 PM
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I don't know if it is just local, but many companies only hire contract employees through "placement" companies. Not certain the correct term, most of the time they are referred to as "body shops." The contract person is their employee and that firm often offers a health insurance (at a price). There is overhead for the hiring company, but it eliminates much of the liability for the company.

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Author: Donna405 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111197 of 121144
Subject: Re: question on health insurance Date: 10/8/2010 12:39 AM
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There is a group called the National Association of Self Employed (NASE)which offers group health to those who are members.

Donna

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Author: kgood16 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111206 of 121144
Subject: Re: question on health insurance Date: 10/8/2010 10:47 AM
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Thanks for all the feedback. I'm the contractor, and they are offering health insurance. I haven't been able to find any reference to benefits for contractors, just things like being independent, controlling your work environment etc. Can anyone tell me where the reference to benefits comes from?

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111207 of 121144
Subject: Re: question on health insurance Date: 10/8/2010 1:15 PM
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Thanks for all the feedback. I'm the contractor, and they are offering health insurance. I haven't been able to find any reference to benefits for contractors, just things like being independent, controlling your work environment etc. Can anyone tell me where the reference to benefits comes from?
___________________________________
I'm not sure what "reference to benefits" you're referring to. By the very nature of the relationship, it's not normal to include someone on the company health plan who is not an employee. Independent contractors, in the true sense of the word, don't have an ongoing relationship with a company that would get them in a company health plan.

Exceptions are sometimes made for members of a board of directors, who are considered self-employed, or maybe a former owner who has a consulting arrangement, and staying on the health plan was a consideraton in the sale.

But being covered by the plan is one thing. Getting the benefits as a tax-free fringe benefit is something else, and THAT is limited to employees under Code section 106. A company-paid health premium for anyone else would be additional nonemployee compensation, and they would have to put it on your 1099.

Now whether you're entitled to an offsettng deduction for self-employed health insurance on page 1 of your return gets a little iffy. IRS has made some pronouncements about who can take that for what kind of coverage, as a plan established "in the name of the business", meaning your own business. And if you don't have your own policy that's hard to do. Either way, that deduction doesn't lower your self-employment income.

Bill

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Author: foo1bar Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111208 of 121144
Subject: Re: question on health insurance Date: 10/8/2010 1:44 PM
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Can anyone tell me where the reference to benefits comes from?

Here's one article:
http://www.entrepreneur.com/article/217208

I don't recall any cases where health ins. was used for contractor/employee determination. But there very well might be one - as I said, if I were the employer, I'd be talking to my HR lawyer. Since you're the contractor/employee, I don't see that you have anything to lose by utilizing their health insurance offer. (Except maybe that in 2 years when your contract is up you have to find a different insurance)

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Author: kgood16 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111209 of 121144
Subject: Re: question on health insurance Date: 10/8/2010 2:05 PM
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Thanks, Bill. I think this is what I was overlooking. (I knew there was something!) The IRS would doubtless see it as compensation for the contractor!

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