Taxing Health Benefits

Introduction

This calculator will simulate the extra cost to you as an employer of not having an available group health plan under the proposed "Public Option" legislation.

This legislation will require all employers to have a group health plan or suffer a penalty of 2, 4, 6, or 8 percent of their payroll depending on the total payroll dollars.

This extra tax will cost you far more than simply supplying a group health plan, and in many cases also partially funding that plan.

Step 1: Your Payroll

Step 2: Tell Us Your Contributions

Employee Premiums

Employee deductions for health, dental, and vision premiums as well as deductions for a flexible spending account reduce that employees taxable income which in turn reduces the employers taxable wages with regard to social security and medicare taxes (FICA).

Below, enter the amounts for all employee monthly deductions toward these premiums.

Employer Contributions

The amount of money you as an employer contribute to employee health plans directly affects your taxable corporate income. As a result any money contributed can be reduced by your corporate tax percentage to determine additional savings available to you under current laws.

Below, enter the amounts for all employer monthly contributions toward these premiums.

Payroll Penalty

As a result of your X payroll, if you choose to not offer a group health plan you will be required to pay X to support the "Public Option." This amounts to X of your annual payroll.

Side-by-Side Summary

Bottom Line

As a result of the penalties and the removal of your tax benefits, it is CHEAPER for you as an employer to carry a group health option. Your group health option will save you $ annually in FICA and corporate income taxes over paying the no group health plan penalty.

The cost of your health plan is so high that your company would fare better by paying the penalty and not carrying a group health plan, or by potentially reducing employer contributions.