Benefit Tip - Tax Savings

Tax Savings (Benefit Tip © 1998)

Most employees have medical, dental and vision expenses that are not covered by their benefit plan. Those with a high income need to earn $2,000 to pay $1,000 of expenses using after-tax dollars.

A better way is for the company to make a $1,000 taxable deductible contribution to a Health Spending Account and let the employee receive reimbursement for their health expenses without paying income tax or payroll taxes.

Consider rewarding, or motivating, key staff with tax-effective compensation. September is the last month that you can set-up a Health Spending Account retroactive to the beginning of the current calendar year.

For more information, visit www.benefits.org/hsa/