Benefit Reimbursement

[milehigh07]

What is the name of your state? Colorado
My company pays 50% of the monthly premium. I can find my own plan for less that what I would have tp pay through my employer. I have asked them to reimburse 50% of my independant premium, but they are stating this is illegal for them to do . Is an employer reimbursing part of an independant premium illegal?

 

[eerelations]

I don't know if it's exactly illegal for them to do so - I'll let my esteemed colleagues address that for you. However, if it's legal for them to do so, they don't have to do it if they don't want to.

 

[tranquility]

It's not illegal. It's just that it would be compensation to you. Say you get $100 benefits ($200 policy) a year and are paid a salary of $1,000. Currently, you get a W-2 for $1,000 and a $200 insurance policy while being out $100. The company deducts the amount paid to you $1,000 and the amount they paid for a qualified insurance plan ($100) and the benefit of *knowing* their employees have insurance.

Under your plan, you get a W-2 of $1,100. The amount you pay for insurance, unless you have a lot of medical expenses, will not be deductible. The company still gets the $1,100 deduction (the categorization is just different), but does not get the benefit of *knowing* the employee is covered by insurance and has to pay additional amounts of payroll taxes. You pay taxes on the extra amount.

Most companies determine there is comfort in knowing the employees are insured and they won't willingly pay that money out freely. Even then, it costs them much more in taxes to pay out the money in salary than to pay out as insurance benefit. You also are harmed in that you will pay more in taxes too.

To answer your question, it's not "illegal" in that someone is going to go to jail, it's just that it costs more to do it the way you want. It's a tax thing.

 

[eerelations]

And even if it cost the company less to do this for you, they are not legally required to do the less expensive thing; it's perfectly legal for them to pay more for something if they so decide.

 

[milehigh07]

Thanks for the feedback!