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Can Obamacare Help Your Employee Benefits Program

Thu, 03 Apr 2014 22:46:39 -0700


If you think the Affordable Care Act (Covered CA exchange in California) is off to a rocky start, you may not be alone. But once the fog clears, the Affordable Care Act will offer very attractive Employee Benefits options, where the employee will be able to select a plan of their choice, and the employer will be able fund part of the monthly cost and get a tax deduction by doing so.


Employee Benefits in the United States is a wide field that includes benefits such as relocation asistance, medical, prescription, vision dental plans, health and dependent care; retirement benefit plans (pension, 401 (k), 403(k); group-term life and long term care insurance plans; legal assistance plans; adoption assistance; child care benefits and transportation benefits. Companies who offer these types of work-life perks seek to raise employee satisfaction, corporate loyalty, and worker retention by providing valuable benefits that go beyond a base salary figure.


Some fringe benefits (for example, accident and health plans, and group-term life insurance coverage up to US$50,000) may be excluded from the employee's gross income and, therefore, are not subject to federal income tax in the United States or Mexico. Some function as tax shelters (for example, flexible spending, 401(k), or 403(b) accounts). Fringe benefits are also thought of as the costs of retaining employees other than base salary. These benefit rates often change from year to year and are typically calculated using fixed percentages that vary depending on the employee’s classification.

Normally, employer-provided benefits are tax-deductible to the employer and non-taxable to the employee. The exception to the general rule includes certain executive benefits (e.g. golden handshake and golden parachute plans) or those that exceed federal or state tax-exemption standards.


US corporations may also offer cafeteria plans to their employees. These plans offer a menu and level of benefits for employees to choose from. In most instances, these plans are funded by both the employees and by the employer(s). The portion paid by employees is deducted from their gross pay before federal and state taxes are applied. Some benefits would still be subject to thFederal Insurance Contributions Act tax (FICA), such as 401(k) and 403(b) contributions; however, health premiums, some life premiums, and contributions to flexible spending accounts are exempt from FICA.


ABIS Group can help employers combine the tax benefits of a group health plan with the lower prices of individual health insurance plans through the exchange. Employers can decide how much they will provide to the employees, and the employees decide if they want to add their own money into a plan. It is recommended that a IRS - approved Portable Health Care Account be set up, so there can be a business deduction, and funds can be used as tax-free income with pre-tax employee contributions.


ABIS Group can help employers with everything needed need in a benefits program – with a wide selection of several health plans, such as MO, PPO, EPO and HSA plan designs, and options for dental, vision, life, and other personal coverage as well.


For more information, please email us as contact@abis-group.com or call us as (800) 554-2247 or (619) 428-4200

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