One of the biggest benefits that come along with having coverage is the ability to deduct some of the premiums as a business expense. The higher your income, the more tax-savings you will achieve.
If you pay for medical expenses out-of-pocket, you are paying for these expenses with AFTER-TAX dollars. The example below illustrates how earning $3,534.19 would create an income tax bill of $1,534.19. Once income tax is paid, one would have $2,000 that can go towards their medical expenses.
Imagine if you didn’t have to pay that income tax? When you have a benefits plan, the cost of the coverage can be fully deductible (depending on the plan you choose). This means that you can pay for the coverage with BEFORE-TAX dollars making this a more tax-effective way to pay for your health care. Even though the cost of coverage may be more than what you claim – it’s the tax-savings that make these plans very attractive.