I just saw a paystub from my new employer - a small medical office - and they are withholding the employee portion of the Medical Care Premiums Post Tax not pretax and this seems completely wrong. Can someone help please.
Here are some additional facts:
1. This is the employee contribution to the Medical Insurance premiums (not FSA/HSA, etc). 2. The employer plan is definitely a Qualified Plan under Section 125. 3. The person in charge of payroll while well meaning may not be getting the right advise from the 3rd party payroll person they use - they said "its post-tax because the employer is only covering the employee portion of the premium so the employee portion of the premiums towards family premium is post tax".
This makes absolutely no sense to me, every employer I have ever had has always deducted premiums pretax; but I don't know where to point to in terms of explaining why it should all be pretax - it would save me money and save the employer money as well on FICA taxes.
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posted: Apr. 12, 2008 @ 1:09p
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posted: Apr. 12, 2008 @ 2:36p
Call the IRS and have your employer deal with them. Any portion of YOUR health care premium you have to pay is non-taxable. I would try explaining this to them, and call the IRS help line, they should be able to provide you with the appropriate regs. (Although I would wait until AFTER the 15th)
posted: Apr. 12, 2008 @ 4:31p
Do they allow changes to the plan mid-year? I believe if they do that the plan does not qualify for pre-tax deductions (I don't recall the other rules...what has been explained to you may be one of them, but I have no idea). Otherwise...haven't other people complained about this?
Senior Member - 1K
posted: Apr. 12, 2008 @ 5:06p
pdpyromaster said: Call the IRS and have your employer deal with them. Any portion of YOUR health care premium you have to pay is non-taxable. I would try explaining this to them, and call the IRS help line, they should be able to provide you with the appropriate regs. (Although I would wait until AFTER the 15th)
- You will cause grief to others for your craptacular information. Call the IRS... sheeese.
Nowhere is it required that your health-care premium be non-taxable. Search for more info, but here is a taste:
A POP. (Premium Only Plan) Section §125 Internal Revenue Code is a way for the employees to pay their portion of the medical premiums and have it be tax deductible for employees and the employer saves on payroll taxes (FICA) this is a simple, IRS-approved change in your payroll process that allows you to use pre-tax salary dollars to pay your employees’ share of medical benefit premiums. Employees fill out a salary reduction contributions form either elect or decline participation in the POP plan. Changes to the POP plan can be made at plan anniversary, more details are in the brochures and law below. Premium contributions are only for employee and dependent coverage, they may not be given back in cash to the employee.
By the way - you can point your employer to the insurance agency/brokerage that sold them the plan OR the plan provider (Humana, Pacific Care, BCBS, etc.) should be able to give your employer the info as well.
posted: Apr. 12, 2008 @ 9:04p
A medical deduction can be pre-tax (Section 125) or post-tax. In order for the medical deduction to be pre-tax, the employer has to both qualify AND be set up for it. Generally, a "small" business employer will not have a cafeteria plan as it provides them little benefit. It is possible for an employer to qualify for a section 125 plan but choose not to administer one.
Normally, the employer's accountant would set up the plan and then direct the employer to inform their payroll service that the medical deduction is pre-tax. The payroll service processes payroll data. You should ask your employer if they have a cafeteria plan. What were you told upon hiring? Have you asked your fellow employees?
posted: Apr. 13, 2008 @ 11:29a
Why dont you go talk to your employer about this? Also, check with your co-workers what is happenning to them
posted: Apr. 13, 2008 @ 11:49a
asarat said: Why dont you go talk to your employer about this?My impression from OP's fact #3 was that OP has discussed it with the employer.
posted: Apr. 15, 2008 @ 4:19p
Thank you all for your help. So i'm not quite sure what happened but even while I was working to gather all this information, employer just informed me that they contacted their payroll/accounting administrator and going forward all the deductions WILL be pre-tax. Whew. Thanks again.
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