Legality of 100% paid ins premiums for some, but not others

felicia_matthews

We have acquired a new property, at which the previous owner paid ALL the monthly insurance costs for the employee only. The employees paid the costs for their dependents accdg to the previous owners rates. When we acquired the property, one of the caveats was that we, as the new owner, continue in this practice of paying 100% for the employee only. I have heard completely different statements as to whether this is a) an ERISA problem and b) if the difference in what the employee is receiving for not paying for ins should be taxed as a payroll benefit? I need concrete answers and am sorely confused. If someone could give me the specific reference to the tax code or a policy statement, that would be helpful...
My e-mail is: [email]felicia.matthews@hr.com[/email]

NaeNae55

First, I assume by insurance you mean health insurance. I don't think it makes any difference if the employer pays 100% employee and none of the dependents or pays 50% of the entire premium. It is all treated the same as far as IRS regs go. Health insurance is a fringe benefit for which the employer paid portion is not taxable to the employee. The employer then uses this portion as a tax deduction for the organization. See Publication 15-B issued Jan 2003 by the IRS. I believe your answer is on page 5.