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I see two parts to this.
1. The tax reporting for amounts the business pays. Obviously, charging the other employees creates a Net expense for the business.
2. Does it meet the requirements to offer this as differential treatment is a Benefit Management issue, not a tax issue. Health insurance plans and their management must meet ACA guidelines and favorable treatment is often a problem.
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I see two parts to this.
1. The tax reporting for amounts the business pays. Obviously, charging the other employees creates a Net expense for the business.
2. Does it meet the requirements to offer this as differential treatment is a Benefit Management issue, not a tax issue. Health insurance plans and their management must meet ACA guidelines and favorable treatment is often a problem.
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This smells like a Discrimination in favor of Highly Compensated Employees situation. If that is the case, then it *IS* taxable to the officers and shareholders.
https://www.law.cornell.edu/uscode/text/26/125
But in direct answer to the question, yes, it should be deductible to the corporation. But it is quite possible that this situation is taxable to the officers and shareholders and/or is in violation of ERISA rules and/or is against ACA rules.
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Unless the person managing all of this is informed on benefits management, you never know what you find when you help them. I like to describe it as, "I am sure you have good intentions, but let's try to follow the rules." Or, they really intend to be selfish and unfair.
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