Tuesday, September 27, 2022

Is Health Insurance Considered Compensation

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Whose Responsibility Is The Payment For Medical Treatment

How Much Do Health Insurance Agents Really Get Paid?

When it comes to a work-related injury, employers are responsible for paying for any and all reasonable and necessary medical treatment for their workers. Do not confuse this with health insurance, which your employer is not mandated to provide you health insurance, even when provided by your employer, and workers comp medical benefits are two entirely different things. Employers have to follow the Michigan workers compensation law on medical benefits.

Under workers comp, medical treatment can include physical therapy, medication, surgery or other operations, hospital stays, and doctor visits. Its range of treatments also include dental care, hearing aids, wheelchairs, prosthetics, eyeglasses, and any other appliance that is necessary in the treatment or relief of the work injury. Nursing care can also be a necessary medical benefit.

Information On Workers’ Compensation

Download the PDF version of this content.

This guide has been prepared to assist personnel and other officers in dealing with claims concerning employment injuries. Following these procedures will facilitate claims work and ensure better service to the injured person and the employer.

Note: Initial report forms for injury compensation have a variety of titles depending on the originating province. Throughout this publication the title “compensation form” is used to refer to the initial report form used by a Provincial Workers’ Compensation Board to report accidents.

These forms should be available in your personnel office, or through your health and safety officer or representative.

Social Security Medicare And Workers Compensation

Wages are also subject to a number of prepayments that go into other kinds of health insurance coverage offered by the federal or state government. These programs may help to cover health costs in certain situations. They are not considered to be provided by the employer, however. An employee will pay a portion of every paycheck into these programs.

  • Workers Compensation will pay for medical care from an injury that occurs on the job. They may offer payouts for certain permanent injuries as well. This program is offered by each state and the specifics vary as a result. The amount that each employee contributes is based on the level of assumed risk that comes with their job.
  • Medicare is the health insurance program that is offered to all adults who are retired and above a certain age. It is a federal health insurance program. Supplemental insurance is commonly purchased by those who have this insurance type.
  • Social Security is a federal program that is designed to provide supplemental income to those who are not working. While most associate this program with retirement, it is also used as a source of supplemental income by the disabled, widows, and widowers.

Because of the prohibitive cost of many medical procedures in the US marketplace, there is a wide variety of tax incentives that are offered to help employees to defray the cost of expensive procedures and basic preventative care.

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Can Employers Reimburse Employees For Health Insurance


Can employers reimburse employees for health insurance? We hear this question a lot. The quick answer is no, at least not tax-free without some serious tax consequences. The IRS is going to treat those reimbursements as income and insist that the employer pay payroll taxes and the employees recognize income tax. There are, however, health reimbursement arrangements that allow employers to reimburse on a tax-advantaged basis.

Employers of all sizes now have more flexibility when it comes to reimbursing their employees for health insurance. This is a huge win for business owners who are looking for a more affordable, efficient way to offer small business health insurance to their teams without having to hassle with a pricey, one-size-fits-all group plan. But first, the back story.

Should I Listen To My Employer If They Instruct Me To Use My Health Insurance For My Injury

Health Insurance After Leaving Job

The short answer? Absolutely not. The longer answer is that this can be a last-ditch effort by an employer to avoid paying out workers comp for your injury. First of all, workers comp is unlimited, with no deductibles or co-pays, as opposed to health insurance so using it for its designed purpose is logical.

Next, it is worth remembering that you could end up paying for treatment out of pocket under your health insurance, but not under workers comp, which will provide reasonable and necessary medical treatment for as long as necessary. It is possible to utilize your health insurance to help pay for treatment while you appeal a denied workers comp claim. This will let you get treatment while you fight for your benefits in court, as many health insurance companies agree to pay for medical treatment in these scenarios, with the understanding that they will be reimbursed in the case of a successful workers comp suit.

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Taking The First Step To Recovery After A Work Injury

All in all, a good summary is that workers comp should cover all reasonable and necessary medical treatment for an at-work injury. Your employer is not required to provide health insurance, but many do anyways to avoid paying out cash benefits to employees. In the case of a denied workers comp case, use your health insurance to cover medical bills while you file a suit against your employer. In the case you lose your medical insurance, utilize COBRA or a union/employment contract. If you have any further questions regarding medical treatment under workers compensation, or would like to take the first step in appealing a denied claim, contact us today. Our lawyers are well-versed in these matters, and can evaluate if your claim is legitimate. Call The Clark Law Office today at +1 347-6900.


Qualified Small Employer Health Reimbursement Arrangements For Eligible Small Employers

Under prior guidance, the IRS indicated that employers could not pay for the cost of individual health insurance for employees, or reimburse the premium cost for such individual policies, without violating ACA market reforms and triggering an excise tax of $100 per day per affected individual. With the passage of the 21st Century Cures Act in 2016, small employers can, beginning in 2017, establish Qualified Small Employer Health Reimbursement Arrangements . Described in IRC § 9831, a QSEHRA is an arrangement that a small business uses to reimburse its employees’ qualified medical expenses. The reimbursement is made after the employee incurs a medical expense and submits documentation. A QSEHRA cannot work in conjunction with a group health insurance plan. A QSEHRA will not violate the ACA coverage mandates if certain key requirements are met.

To establish a QSEHRA, the employer must:

  • Be a small employer
  • Not be subject to the Affordable Care Act’s employer shared responsibility provisions
  • Not provide a group health plan to its employees and
  • Be funded solely by the employer

All full-time employees must be eligible for the QSEHRA after a waiting period of no more than 90 days of service. There are certain permitted exclusions, such as for employees under age 25 and union employees. A QSEHRA may be funded only by the employer, not by employee salary reductions.

Under a QSEHRA, there is a maximum annual employer reimbursement, which is adjusted for inflation.


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Opting Out Of Health Insurance: Employee Compensation In Lieu Of Benefits

Should you be paying employees who opt out of health insurance? Many employers are finding such cash-in-lieu or opt-out programs can reduce insurance costs.

This setup may sound especially attractive to business operating on tight budgets and to those with 50 or more employees, who must offer affordable health insurance coverage or be subject to tax penalties based on the Affordable Care Acts employer mandate. But there are several caveats that employers need to be aware of.

Heres what you need to know about paying employees who opt out of health insurance.

Opt-Out Regulations

While opt-out arrangements may be legal, there are a few facts that businesses should bear in mind. According to Group Health Solutions, cash in lieu of health insurance:

  • Is taxable
  • Should not be provided to enable an employee to purchase an individual policy
  • Must be offered to all eligible employees, not just a select few

Employers can choose one of the following opt-out arrangements:

  • Unconditional opt-out: This option does not require proof of coverage from other sources, but the opt-out payment must be assessed as part of the employers ACA affordability calculation. As of 2018, according to SHRM, the cost of coverage is considered affordable if it doesnt exceed 9.69 percent of the employees annual household income. However, the fact that employees can simply keep the cash without evidence of health care coverage elsewhere could be an issue if questions arise in the future.
  • How Does A Health Insurance Stipend Work

    What’s the Difference Between Workers Comp and Occupational Health Insurance?

    With a health insurance stipend, employees receive a fixed, taxable stipend to purchase individual health insurance. This allows you to give them the option of getting a health insurance policy of their choice, without having to foot the bill for group health insurance for all of your employees, which can be more cost effective for you considering rising healthcare costs. The employer’s monthly contributions are typically added to the employees paycheck as wages.

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    How Is A Fringe Benefit Taxed

    Fringe benefits that are considered taxable income, such as bonuses, are taxed as regular income. Taxes are deducted from your paycheck and the income must be reported on your annual tax return. But other fringe benefits may be deemed nontaxable because they’re deducted on a pretax basis. Certain contributions made to a retirement plan aren’t taxed until you choose to withdraw them from the plan. You may have to pay for reimbursements such as tuition and memberships for off-site gyms. It’s always a good idea to check with your human resources department or the IRS.

    Give Employees Cash To Purchase Their Own Insurance

      Employers and employees health care costs continue to skyrocket. A solution is to allow employers to give employees pre-tax cash to purchase their own health insurance. This move, enabled by a newly enacted federal rule, would put competitive pressure on insurers, driving down costs, and leave more cash in employees pockets.

      In 2018, American corporations spent $962 billion on health care, a mammoth sum that should significantly influence the health care system. Despite this leverage, U.S. firms continue to struggle with spiraling costs. From 2013 to 2019, the price of health insurance premiums for corporate family plans grew by 22%, dwarfing the growth in overall inflation and workers earnings as a percentage of income.

      In response to these price hikes, all too many firms have sought better prices from health insurers by increasing out-of-pocket employee payments, yet have not passed on the savings to employees. By 2019, employees share of health insurance premiums had grown from 26% to 30%, and deductibles had more than tripled. Thirty percent of covered employees were in plans with deductibles averaging a hefty $4,673 to $5,335 for various family high-deductible health plans. Underinsurance grew, with 28% of workers lacking complete financial protection.

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      • Sponsored by GE HealthImproving the way we deliver care.

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      Applying The Family Stock Attribution Rules

      Under the family stock attribution rules, a person is considered to own the stock owned by that persons spouse, children, grandchildren, and parents , via Sec. 1372). Stock constructively owned by one family member cannot be reattributed to a second family member when applying the family stock attribution rules to that second family member ).

      Example:W owns 100% of the stock of S, Inc., an S corporation.W retired a few years ago and promoted his son P to president and CEO ofS. The corporation covers all its employees, includingP, with group medical insurance. The current-year cost of the premiums forP is $3,000.

      SinceP’s father owns 100% of the stock of S,P is deemed to own all the stock for purposes of the 2% test. According to Rev. Rul. 91-26, the corporation treats the insurance provided toP as compensation.P’s taxable income is increased by $3,000, while the corporate deduction passes through to W, who owns 100% of the stock. However, P may be able to claim an above-the-line deduction for the medical insurance premiums under Sec. 162.

      Flying Accidents Compensation Regulations


      When injured or killed while travelling on a non-scheduled flight , an employee or his or her dependants may make a claim either under the Government Employees Compensation Act or under the provisions of the Flying Accidents Compensation Regulations. Any claims made under the regulations should be forwarded to the nearest office of the Veterans Review and Appeal Board. The appropriate Regional Office of the Federal Workers Compensation of HRSDC-Labour Program should also be notified of the accident.

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      Employer Contributions To Pension Plans

      Some companies provide pensions for their employees. This means their employees will receive ongoing monthly payments after they retire from the company. The matching principle requires that the cost of the benefit should be recognized during the years that the employees are working , and not when the employee is retired.

      Note: In effect, pensions are part of the compensation package given to employees working at a company. While some parts of the compensation package are paid out during the time the employee is working, other benefits are deferred until the employee is retired. The cost of the entire compensation package, however, must be expensed or assigned to products manufactured when the employee is working, so that the cost of the employee’s work is matched with the revenue resulting from the employee’s work.

      The concept is that in the years that the employee works, the company will charge Pension Expense and will credit either Pension Payable or Cash. For more specifics on pensions, you are referred to an Intermediate Accounting text or to the Financial Accounting Standards Board’s website www.fasb.org.

      Taxes On Disability Payments

      Disability payments, like other forms of insurance benefits, are only taxable if your employer pays for the policy. You will likely pay tax on these benefits until you retire. At that point, tax law treats it as a retirement annuity instead of health benefits.

      If your disability or other health problems require long-term care, money you get from a long-term care insurance policy is usually tax-free. If there’s a cash surrender value on the policy, your benefits are taxable.


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      Death Occurring Away From Home

      When an employee dies as the result of an occupational injury or disease while serving at a location other than his or her usual place of employment, and the resultant charges exceed the amount of compensation payable, a supplementary payment may be made with the approval of Treasury Board. The additional expenses are usually for the preparation and transportation of the body. Particulars of any such claims should be sent by the employer to the appropriate Regional Office of the Federal Workers Compensation of HRSDC-Labour Program, as soon as possible after the accident.

      Employee Has Choice Of Action

      Pay health insurance or mortgage?

      A workers’ compensation law principle recognized in the Act is that workers’ compensation is a substitute for common law action taken by an injured worker against his or her employer. However, when an employee’s injury is caused by a third party, that is, a person who is not the employer or employer’s servant or agent acting in the course of employment, the employee or his or her dependants have the right to elect

    • to claim compensation under the Act, or
    • to bring an action against the third party.
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      Reimbursing Individual Insurance Coverage In The Aca Era

      Prior to the ACA, another popular benefit was simply reimbursing employees for individual insurance coverage that they purchased on their own. In most cases, these types of reimbursements could be made on a non-taxable basis. However, as part of the implementation of the ACA, these types of so called employer payment plans became largely prohibited, regardless of whether the reimbursements are taxable or non-taxable.

      For the time being, the only ways for an employer to pay for individual insurance coverage obtained by an employee is to establish a Qualified Small Employer Health Reimbursement Arrangement or provide additional taxable compensation, whether though a simple salary increase or a monthly bonus or stipend. Regarding the additional compensation approach, the key is that the payment not be a reimbursementi.e., not conditioned on proof that the employee indeed obtained his or her own individual insurance coverage. Rather, the increased compensation must be unconditional and taxable.

      What Do Employers Gain

      If workers prefer to obtain health insurance through their employers rather than on their own, why are employers willing to act as their health insurance agents? Part of the explanation undoubtedly rests with the tax incentives for employers to offer coverage to workers and their dependents. Payments for health insurance are deducted from gross revenues in calculating the employer’s taxable income, and they also are excluded from the base payroll in determining the employer’s share of the payroll tax for Medicare and Social Security. More important, however, employers may want to offer health insurance to their workers because failing to do so could harm the firm’s performance. The evolution of company-sponsored medical care plans suggests that employers have long recognized the value of providing health insurance to workers. With the rapid growth of manufacturing and unions before World War I, the provision of welfare benefits, including health insurance, was widely acknowledged to be good business: The employee plans

      relieved the employer of the solicitations for aid for the destitute dependents of deceased employees also, it was not necessary for the employees to pass the hat among themselves during working hours for the same purpose the program assisted in attracting better employees and in retaining those already employed, employee morale was enhanced, job relations improved and the public relations of some firms favorably affected.

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