IRS Schedule C is used by businesses to tabulate deductible business expenses. Line 14 is used to deduct contributions to employee benefit programs. The instructions specify that accident and health plan contributions qualify. Self employed workers can make a deduction on line 29 of form 1040. The write off must be reduced if the small business tax credit was used.
Absolutely, after attracting and retaining quality employees this is one of the prime advantages for businesses to offer health insurance to their employees. The portion of group health insurance and most other group insurance products that are paid for by an employer are a deductible business expense. For the 2014 tax year the Affordable Care Act has introduced another variable in this equation that employers with less than 25 employees who earn an average wage of less than $50,000 per year need to be aware of, they can be eligible for a tax credit of up to 50% of what they pay towards employee premiums (35% for tax exempt organizations). They catch is that the employer has to purchase their group health insurance through a state or Federally Facillitated Marketplace's SHOP program to qualify for this credit. As the SHOP program was very problematic during the rollout of the health insurance marketplaces and insurance company participation in various state's SHOP programs varied greatly, this tax credit will probably not be used by very many small businesses on their 2014 taxes. So the business expense deduction is the most likely way that most businesses will reduce their tax exposure.
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Marlin McKelvy
Consumer Directed Benefit Solutions
www.cdbsagency.com