Tax Savings (Benefit Tips ® - © 1998)
Most employees have medical, dental and vision expenses that are not covered by their benefit plan. Those with a high income need to earn $2,000 to pay $1,000 of expenses using after-tax dollars.
A better way is for the company to make a $1,000 taxable deductible contribution to a Health Spending Account and let the employee receive reimbursement for their health expenses without paying income tax or payroll taxes.
Consider rewarding, or motivating, key staff with tax-effective compensation by introducing a health spending account this year.