Q. My church offers group health insurance where employees pay 50% of the premiums. Is the church contribution a taxable benefit? L.F., via e-mail
A. No. As with for-profit business entities, the cost of the employer-provided health insurance generally is tax-free to the employees. The employees are taxed on wages contributed to the health insurance payments. They may include these contributions in the computation of the medical expense deduction on their individual tax returns.
Tip: If the church sets up flexible spending accounts (FSAs), employees can allocate funds on a pretax basis to accounts used for health care expenses, thereby saving tax.
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