Ok, this whole incorporating thing is all new to me, so bare with me. My husband and I are looking for health insurance. We have recieved several faxes from companies with their requirements. I was wondering how a corporation works with health insurance? I believe that the corporation has to contribute or reimburse at least 50% of insurance premiums. I read that a C Corp. can contrubute (reimburse) 100%. Please let me know if I am understanding this correctly. Thank you!

I don't have a clear answer for you, but i'm not comfortable your comments are spot on correct. I think the first point of clarification needs to be whether you are doing a 'group' policy or individual policies. My experiences for just a few people group policies are more expensive that indiv. If a group policy, then there are probably requirements regarding how much the company directly contributes. I think the 'group' policy is where you are getting info regarding the requirements of the company contributing ... but I don't think it matters if you are a corp, partnership or sole prop.

It's worth it to check out third party benefit management services, like ADP or Administaff.

I've helped to start two privately funded biotech firms in the last 10 years, and each time I've used Administaff. We were able to put all of our employees on a health plan that was reasonably priced, because the risk is spread across the pool of Administaff clients.

There is a menu of fees associated with their services, but it was a bargain to be able to pass this very important and complicated workload on to someone with expertise, and focus instead on growing the company.

You may want to consult with an insurance broker in regards to your questions.

From my understanding, there is no requirement by law to assume responsibility for any % of an employee's health benefits. However, In regards to taxes for C-Corporations, C-Corp employers can deduct 100% of Employee Health Benefit as expenses from their tax filings versus the 25% for self employed individuals.

I think this is where the confusion may lie. The deductions you speak of are regarded to a relationship between Health benefits and Taxes. The law is that an employer MUST make health benefits available, but there is nothing I know that states you should assume part of the expense.

Here is something from http://www.dalelaw.com/articles/Business/medical.htm

One of the most important considerations for any individual in the work force is the availability of medical insurance through her/his employer. Presently, a self-employed individual may only deduct 25% of the health insurance premium as a business expense on the Federal Income Tax Return. In other words, 75% of the cost of health insurance will be borne by the individual without any tax relief for that portion of the payment. The tax treatment of medical insurance cost is the same for any employee of a partnership, limited liability company, or "S" corporation since the income tax consequences are passed through those entities directly to the employee. Only when the "C" corporation format is utilized will the entire medical insurance premium be deductible by the corporation and not included in the individual's income. Remembering that the difference between a "C" corporation and the other entities is that it is subject to tax in itself, as opposed to the other forms, which pass the tax consequences through to the individual owners, this could be a significant factor in choosing the type of business entity to be utilized. Of course, the availability of the 100% deduction for medical insurance by a "C" corporation is only one factor, and a goal would be to minimize any taxable income realized by the "C" corporation, by proper utilization of this and other corporate deductions and/or income tax shelters.

If you need help finding a good Group Health Plan, my services are available. I handle Commercial General Liability, Commercial Property, Prefessional Liability, Workers Compensation and Group Health in the State of California.