Author Topic: HDHP premiums reduce SS&Med tax?  (Read 1576 times)

Dezrah

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HDHP premiums reduce SS&Med tax?
« on: September 14, 2015, 04:11:01 PM »
Is it possible to deduct your health insurance premium for purposes of calculating Social Security and Medicare taxes?
 
Iím aware that this is kosher for employee contributions to an HSA account provided theyíre pulled directly from the paycheck, but Iíve never seen anything about this also working for the premiums of the HDHP.

When I try to hand-check my paystub, the only way I can get the math to work is if I deduct both my HSA contribution and the HDHP premium.  My HR representative says thatís how it works, but I feel like I would have heard about this before if that were the case.

Am I just missing something?  Are there special and/or circumstances that might apply in my case?  Or is our payroll company just making a mistake?  The difference will come to about $100 by the end of the year which I assume would simply be accounted for in our annual tax filing, so not a huge deal, but Iíd still like to know whatís going on.

Thanks.

BarkyardBQ

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Re: HDHP premiums reduce SS&Med tax?
« Reply #1 on: September 14, 2015, 04:19:02 PM »
By contributing to your HSA you have less taxable income, taxes and social security will be lowered.

By contributing to an HSA and having your premiums taken out pretax you will pay less to medicare.

AlwaysLearningToSave

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Re: HDHP premiums reduce SS&Med tax?
« Reply #2 on: September 14, 2015, 04:34:13 PM »
I'm guessing your employer offers a Section 125 Cafeteria Plan to fund health insurance, where your portion of the HDHP premium is withheld pre-tax. 

EDIT:  See this:  http://www.irs.gov/Government-Entities/Federal,-State-&-Local-Governments/FAQs-for-government-entities-regarding-Cafeteria-Plans

"Salary reduction contributions are not actually or constructively received by the participant. Therefore, those contributions are not considered wages for federal income tax purposes. In addition, those sums generally are not subject to FICA and FUTA. See Sections 3121(a)(5)(G) and 3306(b)(5)(G) of the Internal Revenue Code."
« Last Edit: September 14, 2015, 04:37:43 PM by AlwaysLearningToSave »

seattlecyclone

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Re: HDHP premiums reduce SS&Med tax?
« Reply #3 on: September 14, 2015, 06:17:13 PM »
Yes, premiums and HSA contributions are generally withheld prior to Social Security and Medicare taxes.

Dezrah

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Re: HDHP premiums reduce SS&Med tax?
« Reply #4 on: September 15, 2015, 06:22:35 AM »
Well there you go then.  I guess I just didn't scrutinize my paychecks that closely in the past.

Thanks for your help.  It does put my mind at ease a bit.