If an employer provides group health insurance for himself and spouse does he have to offer it to all employee
April 8, 2010 
1 Comment
If an employer of a small corporation ( under 12 employees) pays for group insurance for himself and spouse and children that are over 25 years of age. The payments are made directly from the corporation. The children reimburse him personally for their part of the fees and he puts that reimbursement into his private account. In years past he would give each employee 215.00 to buy their own insurance. He stopped that several months ago. I guess my question is this…Is this legal under ERISA? or any other government plans?
Thanks!!
small employers [under 25 employees, i believe] aren’t directly subject to ERISA.
what this practice, as you describe it, might be is income tax fraud. the IRS would be interested in that.
taking from the corporation and receiving the reimbursements personally would, one assumes, create a tax deduction in the corporation while the reimbursement money lands in the pocket of the owner. If the corporation is a for profit [files form 1120], that’s tax fraud.
Even if the corporation is filing as a sub-S corp [form 1120-S] — that’s when the net income is taxed directly to the owner, the scheme described takes a deduction for the health insurance costs of someone other than the owner and his minor or college age children. I believe that’s tax fraud.
of course, if there are minority owners who are not receiving proportionate benefits, this scheme is also a majority owner or managing owner defrauding his minority owners. That’s specifically illegal and is, in most jurisdictions, a criminal matter for the police and DA..
small employers [under 25 employees, i believe] aren’t directly subject to ERISA.
what this practice, as you describe it, might be is income tax fraud. the IRS would be interested in that.
taking from the corporation and receiving the reimbursements personally would, one assumes, create a tax deduction in the corporation while the reimbursement money lands in the pocket of the owner. If the corporation is a for profit [files form 1120], that’s tax fraud.
Even if the corporation is filing as a sub-S corp [form 1120-S] — that’s when the net income is taxed directly to the owner, the scheme described takes a deduction for the health insurance costs of someone other than the owner and his minor or college age children. I believe that’s tax fraud.
of course, if there are minority owners who are not receiving proportionate benefits, this scheme is also a majority owner or managing owner defrauding his minority owners. That’s specifically illegal and is, in most jurisdictions, a criminal matter for the police and DA..
References :
cpa