Section 106 which allows Group Health Insurance to be a tax deduction for both employer and not income to the employee is the biggest break there is in the Tax Code, even more so than Mortgage Interest.
Providing Health Insurance is a GREAT way for EmployER’s to attract and retain better, stable, dependable workers. It’s also the law for large employers (over 50 lives) to meet the mandate and for the employees in CA to meet the individual mandate.
Internal Revenue Code Section §106
allows Employers to deduct Group Health Insurance Premiums for their employees including the owners and officers, as long as it’s a qualifying Group Health Insurance plan as a business expense. PLUS, Employees do not have to report employer paid premiums or the benefits in their gross income! Scroll down to our references section for more details. Health Coverage Guide *
If your employees are contributing to the premiums, their portion can also be tax deductible by using a Section §125 POP (Premium Only Plan) or a cafeteria plan.
Employees whose employers do not provide Affordable Group Coverage, might qualify for Tax Credits under Obamacare. If the employees on their own want Medical Coverage – like going to Covered CA the premiums are not deductible unless they are more that 10 % of adjusted gross income. Learn more.
References and Technical Links
IRS More Info on Health Care Arrangements to not have a group plan but pay for employee individual plans. IRS Notice 2013-54
IRS Publication — Business Expenses #535
Tax Guide to Fringe Benefits — Publication 15-B
Internal Revenue Code Title 26 USC
Tax Facts: Employer Deduction — Password-Protected Tax Facts on Insurance — Employee Benefits goes into very detailed explanations. It can be purchased for $99 or check their website for a trial subscription.
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Child & Related Pages
The Section 106 provision is under attack 3.1.2017
Learn More NAHU * Modern Health Care 3.2.2017
Tax-advantaged Health Savings Account to pay medical expenses not covered by insurance.
- Self Employed & S Corp Health Insurance Deduction on 1040 Line 29