Discussion:The reason for unions

More than likely 10-15 years ago, the employer paid the health insurance but then began to make employees contribute, but to help this medicine go down, they created the before tax plan. Employer pensions were replaced with 401Ks (which became 201Ks when the market fell in 2000-2002) and benefits such as insurance went the way of the dodo.

The advantage with having this paid with pre-tax dollars is that the cost is reduced by whatever tax bracket you're in thus keeping more dollars in your pocket. AND your husband's lucky his company is still even offering dependent health insurance even if you have to pay for it. My husband's a fireman (yes-there's a union). He's grandfathered so he has the ability to get health insurance for me which we pay for. It's not even offered for the new kids that are being hired now. The only benefit that he gets from the union is that they are nice enough to take $500 a year (after-tax) from him. If the local has a grievance, they have to do a special assessment to pay the national fire union to "review" it. Then if the national thinks there's a case, there's another assessment. (Do unions drive me nuts? YES)

My laptop died for the fourth time and Best Buy is sending me a new one but it won't be in until Wed or Thurs.

Yes the others are probably claiming the health insurance but you know better And they'd have to have some pretty hefty expenses to be able to take medical.

also, your weekly paystubs should reflect true wages and then the reduced taxable wages. As an employee, you are not required to have this deducted pre-tax. You may request that they withhold this amount after tax, thus giving you higher W-2 wages and higher social security wages as well. some older folks sometimes opt out of pre-tax scenarios in an attempt to up their SS benefits. I have never done an analysis of benefits gained or lost due to pre-tax deductions, but would be interested to know the breakeven point.

If employees have day care expenses and a lot of co-pays, the savings can be even greater. but there are more filing requirements when instituting these aspects.

Third, I don't think an employee has the option to participate in the plan. Even if the employee had the option, how would he/she convince the employer to let him/her opt out? That would cost the employer more in payroll taxes.

Crow, yes FICA/medicare is still paid on the gross when 401(k) deductions are involved. The tax benefit there is on the income tax side.

Fred, I would make one slight correction to your first post. You stated that the pre-tax health insurance should not show up on the W2. I suggest to my clients that they put the amount in Box 14. That way anyone can calculate the true gross pay the employee receives.