Tax Benefits of Group Health Insurance Plans:

Small business owners should always be on the lookout for ways to save on their taxes. If your business is operating under specific types of business entities, you may be taxed twice on certain income. In order to use the maximum allowable amount of deductions, it is important to find out what you may be missing.

Many small business owners are unaware that their group health plans can offer significant tax savings. Here are just a few ways that your business can save on taxes when it comes to group health insurance.

Premiums

You are allowed, when you have a group health plan for your employees, to write off 100% of the premiums that you are paying. This tax deduction is very significant and can save your company thousands of dollars when April 15 th rolls around.

You will need to have receipts for your payments to use them as a tax deduction, as well as a copy of your insurance policy to prove the amount that you are currently paying. Save all of these documents and then include them when you visit your tax preparation agent.

Your tax preparer will also be able to help you if there are deductions that you may have missed when it comes to paying your employee’s premiums or other health care needs.

Health Savings Accounts

The new health savings accounts are a great way for small businesses to save on their taxes, and they provide tax benefits for employees as well. Contributions that are made to a health savings account are tax-free and they are not subject to federal or state income tax.

You will need to have an HSA eligible group health insurance plan to take advantage of these tax savings. This means that the insurance plan must have a deductible that is greater than $1000 per year and it may not offer a co-pay. If your plan is HSA eligible and your employees are using health savings accounts, you will need to discuss your options with your tax professional. It may be beneficial for you to contribute to your employee’s health savings accounts.

There is a limit to how much you can contribute to a health savings account each year. The contribution must not exceed the plan’s deductible or the maximum contribution level of $2650 for singles and $5250 for families. So, if your group health plan has a $2000 deductible, you would only be able to contribute $2000 for each employee’s health savings account.

Currently, there are many more tax incentives that are in the works to assist small business owners with their taxes. It is important to stay informed on new legislation and tax laws each year. If wading through pages of incomprehensible date from the IRS does not seem a worthwhile pastime, it may just save you thousands of dollars each year. If you prefer, you can also employ a tax professional or tax attorney that will be able to assist you in determining your deductions each year.

Taxes are inevitable, but they don’t have to break your business. When you know your rights and you stay informed, you can ensure that your business won’t be paying too much tax and you will be able to take advantage of all the incentives that are currently available for your business and your employees.


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