Sunday, June 19, 2011

Are Health Insurance Deductions from Payroll pre-tax or post-tax?

I've recently realized that my company was deducting too much from my check towards my health insurance. So now they have to reimburse me. Should my reimbursement check be tax-free since the amount deducted was from post-taxed income?
--------------------
Health insurance deductions don't have to be deducted pre-tax, but if your company has a Section 125 plan in place, they usually are. I know where I work, deductions are automatically taken pre-tax unless an employee specifies otherwise in writing, or there is a domestic partner covered. Therefore, if the deductions came out of your paycheck on a pre-tax basis, your reimbursement will be taxed. If the deductions came out on a post-tax basis, then your reimbursement would NOT be taxes as you have already had taxes withheld, and would not have to have any withheld again. Hope that makes sense.
Source

No comments:

Post a Comment