Life & Health Insurance Exam (National Portion)Health InsuranceEasy
Which of the following statements regarding the tax deductibility of group health insurance premiums paid by an employer is generally TRUE?
- APremiums are tax-deductible for the employer as a business expense.
- BPremiums are only deductible if the employer is a non-profit organization.
- CPremiums are considered taxable income to the employees.
- DPremiums are never tax-deductible for the employer.
Show answer & explanationAnswer & explanation
Correct answer: A. Premiums are tax-deductible for the employer as a business expense.
Group health insurance premiums paid by an employer are generally considered a tax-deductible business expense under IRS regulations, which encourages employers to offer health benefits.
Why the other options are wrong
- B. Tax deductibility is not limited to non-profit organizations; it applies to most employers.
- C. Employer-paid premiums are generally not considered taxable income to the employees.
- D. This statement is false; they are usually deductible.
Employer-Paid Group Health Premiums (Tax)
Group health insurance premiums paid by an employer for employees are generally tax-deductible for the employer and not taxable income to the employees.
- Deductible for the employer as a business expense.
- Not considered taxable income to employees.
- A significant benefit of employer-sponsored health plans.
- Encourages employers to provide health coverage.
Memory trick: Employers deduct, Employees don't declare.