The following text is an excerpt from our free resource, The Small Business Guide to individual health insurance reimbursement . If you want to download the full resource, click here. 
Every day, I hear small business owners questions about how the employee to report for individual health insurance.
"Should we have a scholarship?"
"We should set up a repayment plan?"
How would any of this work? "
" What is better? "
[1945006IndiesemArtikel], I will reimburse the two main options for the employees for their individual health insurance premiums, and talk about the pros break and disadvantages of each approachoption # 1:. health insurance stipend
with a health grade, all similarly situated employees receive a fixed, taxable stipend individual health insurance to buy, whether or not to buy, they actually. the monthly employee contributions are his or her paycheck to typically. at the end of the year the employees receive a form the amount of their salary is health insurance that they be notified as income on their income tax return
Pros health insurance Stipend .:
- Not a group health plan
- No compliance issues
- Very simple and easy administration (automatic payroll additions)
disadvantages of health insurance Stipend:
- company is obliged to pay income tax on reimbursement (7.65%)
- The employee must refund as income claim (20-40%)
- receive employees money regardless of whether they use it to a health insurance premium
option # 2: billing plan
with a repayment plan, all are similar, there is a fixed amount of purchasing staff granted individual health insurance, but only receive money when they actually buy health insurance. Employees buy their own individual health insurance and prove their employer (or the third party of the employer). Employees receive the monthly payments to the allowance amount that meet their content added tax-free rule
Pros of a reimbursement plan .:
- the employee must demonstrate expense before reimbursement
- It feels like a real, program structured health benefits
- exempt employees (20- 40%)
- There are no payroll taxes for employers (7.65%)
Cons a reimbursement plan:
- There is a group health plan
- employer must take action to ensure compliance with the group plan rules *
* is a reimbursement plan a group health plan, and is in compliance with IRS, ERISA, HIPAA, ACA market reforms topic and other applicable rules. To ensure that your arrangement corresponds, and easy to respect, to use a refund software vendors.
Tip: With a repayment plan (option # 2) the business only employees, reimbursed for eligible premium expenses up to the amount of their compensation. Without annual renewal increases, is no minimum fee and no minimum conditions, the business is free to set and control all costs.
So, which is better?
Whether a health grade (option 1) or reimbursement plan (option # 2) for your small business is better depends on your health benefit objectives. For many small businesses, a formal repayment plan (option # 2) reaches both the health benefits objectives and saves the business money because of the tax savings.
What do you think? Leave a comment or question below.
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