Health Insurance Fringe Benefit

[alexander6]

Our farm business offers health insurance to qualified employees through a Section 125 cafeteria plan.  If employees choose health insurance instead of cash, the value of the benefit is non-taxable, and is not included in the gross wages reported to the employee on his/her W-2.  My question is whether the amounts paid by the farm business on behalf of the employee for health insurance are a deductible business expense?  If so, which line on Schedule F is it reported on:

Line 15a "Employee benefits: Employee health ins.", or

Line 22 "Enter gross wages before work credits"

[MinhT1 · Accepted solution]

The amounts paid by the business for health insurance for the employees (not the share contributed by the employees though the section 125 plan) are deductible as a business expense and are reported on line 15 of Schedule F.

[alexander6]

Thank you very much for the reply.  I’m not sure I understand what you mean by “the share contributed by the employees though the section 125 plan”.  Would this be in the situation where the employer paid a certain percentage of the health insurance plan and where the employee paid the remaining percentage of the plan?  In our case the business pays 100 percent of the health insurance premium, in lieu of salary that might otherwise be taken by the employee. The employee’s check is reduced by the monthly premium amount, and relevant taxes are taken out of the remaining amount of the salary. 

[ColeenD3]

If the business paid 100%, then the business can deduct 100%.