Federal Tax Considerations

Question 1

Company Disability Insurance Tax Benefits

Answer 1

If disability premiums are considered a business expense, the premiums can be deductible to the business. If benefits are paid from a policy that is deductible then benefits are taxable. If benefits are paid from policy that is not deductible, benefits are not taxable.

Question 2

HSA Beneficiaries

Answer 2

If named beneficiary if member’s spouse, then the HSA becomes the HSA of the spouse. If beneficiary is someone other than the spouse, then it becomes taxable income to the person.

Question 3

Key Employee Disability Tax Benefits

Answer 3

Premiums are not deductible, benefits are not taxable

Question 4

Business Overhead Expense Disability Income Taxation

Answer 4

Premiums deductible, benefits taxable

Question 5

Application of FICA for Disability Income

Answer 5

FICA withholdings (medicare and SS) are made from disability income payments paid while the member is working. FICA withholdings are also taken out for the first 6 months after the member stops working for the employer.

Question 6

HRAs

Answer 6

Completely employer sponsored. Plans established by employers to reimburse employees for qualified medical expenses. No contributions are made by employees - solely funded through employer.

Question 7

FSA

Answer 7

Employee sets aside pre-tax dollars to pay for medical expenses based on how much they think they will incur that year. Employees choose how much of their salary is put in. Grace period of up to 2.5 months that they can use for medical expenses, but there are no refunds. $500 carryover also allowed, but not both. Funds expire

Question 8

Deductible/OOP minimums for HSA

Answer 8

Single: $1,350 Family: $2,700 OOP- Single: $6,750 Family: $13,500