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As a proposed company policy, is it a legal/good idea for employees to just expenses their health care premiums? (By "expense", I mean submit an expense report and get a check that has nothing to do with payroll.) Does this count as "fringe benefits" in the IRS sense that would be required to show up on my W2?

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Instead of acting as a health insurer why not just pay for their premiums? Might be less expensive in the long run. – Karlson Mar 9 '12 at 20:02
Yeah, the premiums. Employees are expensing the premiums, not the medical bills themselves. I just was wondering if the IRS allows this unusual behavior. – Brad Mar 10 '12 at 0:14
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Since insurance as a young male is about ~$80/mo and if I run it through a company account it's ~$250/mo we tend to just give them a slight raise and they cover insurance on their own direct. So, it shows up as normal payroll money to them. Something like this isn't uncommon for small companies. – Ryan Doom Apr 8 '12 at 23:49

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I'm not in a position to offer specific tax advice for your situation, but this IRS publication on employer fringe benefits might be helpful to you: http://www.irs.gov/publications/p15b/index.html

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If you're a sole-proprietor, the premiums are written off on your 1040, line 29. I'll let others answer for other business types.

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