Not sure if this is the right place to ask

[yasmina27]

Mods, please move if you feel it more appropriate elsewhere.

Our union is currently in negotiations with our employer (a public school district). We have been working w/o a contract since June. One of the issues is, like everywhere, employee contribution to health care. Currently we pay nothing - it is a "hidden" part of our compensation. We know, realistically, that virtually everyone else has to pay something toward their health benefits.

My husband, however, says that it is to everyone's benefit for us to take a lower salary increase but for the district to continue paying our benefits for tax reasons. Whatever we have to pay toward our health care, we have to pay tax on, they have to match retirement benefits on, etc. Essentially, it's a win-win situation for them to pay for it, and lose-lose on anything we have to contribute.

Sounds right to me. However, my concern is that if it makes so much sense, why is he the only one who ever thought of it? Surely there must be something we haven't taken in consideration, or there would be other situations where this come up. What are we missing?

Any opinions?

[spindrifter]

1. What about a "cafeteria plan"?

Many employers use this as an offset for employees who must pay part or all of their health benefits. Before the plan year begins you estimate how much you might have to spend above your health care limits for approved expenses. This is deducted from your pay, pre-tax. OUr plan enables us to get all of our health care insurance costs deducted before taxes. In addition, I figure how much I might need to pay for health and dental expenses that are not covered by insurance. If you over-estimate the money is not returned to you, but goes to a non-profit chosen by the employer. It still remains pre-tax.

[muriel_volestrangler]

2. The advantage of no employee contributions may vary between people

depending on if you're married, your spouse can get family cover, whetehr you have children, etc. Perhaps some people think they'll be better off with the higher salary increase.

[DoYouEverWonder]

3. Money deducted for health care from your payroll

is exempt from payroll taxes.

Also if you contribute to a health savings plan, that money is tax deferred. As long as you use it for health care then you don't pay taxes on it.

[NMDemDist2]

5. correct n/t

[salin]

6. ignorant question...

this year our fully paid healthcare became a $100 a month we-pay but it is deducted from our pay - hadn't thought about any tax consequence - the $ is deducted from my pay - is that $100 a month taxable or not (I assumed it wasn't but don't want to be wrong.)

[yasmina27]

7. So any $ deducted for from payroll healthcare is exempt?

From any taxes? Do you have a source for this that I can show hubby? Thanks!

[pinto]

4. I'd suggest you talk with a union rep for some clarification.