There are many ways to save money on group health insurance plans, including embedded deductibles and investing in employee wellness plans, but what about group health insurance tax benefits?
How can you, as a small business owner in Texas, maximize tax credits and save money on your taxes for 2024?
Overview of Group Health Insurance Tax Benefits
Are you confused by group health insurance tax benefits in Texas? Here are a few of the top ways you can reduce the costs of your small business health plan.
Annual Premium Health Care Tax Credit
The Small Business Health Care Tax Credit could be up to 50% of the total cost you pay for employee health care premiums. To qualify, you must meet the following requirements:
- Have fewer than 25 full-time or full-time equivalent employees
- An average employee salary of $56,000
- Pay at least 50% of employee insurance premiums
- Offer SHOP coverage to your full-time employees
Check out the Small Business Health Care Tax Credit Estimator to determine how much you could save.
Payroll Tax Savings
Pre-tax contributions to group health insurance allow both employees and employers to save on taxes. Employees can reduce their taxable income, lowering their federal income, Social Security, and Medicare taxes. At the same time, employers benefit by paying less in payroll taxes. This setup, often through a Section 125 cafeteria plan, allows small businesses to offer competitive health benefits while reducing operating costs, making it a win-win for both parties, especially as the business grows.
Section 125 Cafeteria Plans
Section 125 Cafeteria Plans allow employees to pay for certain benefits, such as health insurance premiums, using pre-tax dollars, reducing their taxable income, and saving on federal income, Medicare, and Social Security taxes.
As an employer, you enjoy payroll tax savings by lowering the taxable wages you must report, reducing your overall tax burden. Section 125 is also a great way to enhance your benefits package, making it an attractive option to employees without increasing the costs.
If you’re a small business owner in Texas, a Section 125 plan is cost-effective without reducing competitive health benefits. For more information, reach out to the Primary Care Insurance Solutions team.
Is Health Insurance a Tax Write-Off for Small Businesses in Texas?
As you’re likely familiar, Texas has no state income tax.
Federal tax savings through group health insurance are even more important for Houston-based business owners.
The aforementioned tax credits and savings are the only healthcare savings employers in Texas can leverage to reduce their overall tax burden.
How to Maximize Tax Savings Before Year-End
As the end of 2024 approaches, we highly recommend that small business owners review their health insurance plans and consult with tax professionals.
Every year brings new challenges and opportunities and now is the perfect time to prepare for success in the coming year.
Is your current group health insurance plan leveraging tax savings? If not, now is the time to restructure it.
There are a few red flags to look for in your small business health plan:
- Failure to claim the Small Business Health Care Tax Credit
- Failure to deduct Premium Costs.
- High payroll tax burden.
- Outdated compliance with tax laws.
- Lack of Section 125 Plan Option
If you notice one or all of these issues with your existing group health insurance plan, now is the time to act. Consult with a tax professional to learn more about how you can take advantage of existing healthcare and payroll tax laws and capture those tax credits before the year’s end.
How Primary Care Insurance Solutions Can Help
Taxes are confusing. Even the most seasoned small business owners in Houston, Texas, can feel overwhelmed with tax planning. At Primary Care Insurance Solutions, we stay up-to-date on all the healthcare laws so you don’t have to.
If you have a question about your existing group health insurance plan, we’d love to help. Send us your question via our contact form, and we’ll reply quickly.
If you’re ready to explore your plan in depth and see the cost savings we can offer, let us know, and we’ll schedule a consultation.
Partner with a team with over thirty years of experience in the industry to start reducing your tax burden. We look forward to working with you.
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