Advantages and Disadvantages of Contributory and Non-Contributory Group Plans

Can I Deduct Health Insurance Premiums Deducted From My Paycheck - Advantages and Disadvantages of Contributory and Non-Contributory Group Plans

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As we mentioned in previous article, many corporations offer competing packages, and that's even a strategy in hiring and retaining employees. These competing packages include group insurance to plans that contribute individual withdrawal accounts or former registered pension plans, etc. In this article, we will discuss the advantage and disadvantage of contributory and non-contributory in group insurance plan.

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Can I Deduct Health Insurance Premiums Deducted From My Paycheck

I. Contributory Plan

Under this type of plan, employees conduce a quantum of group insurance premium.

1. Advantages of gift plan includes
a) prime contributed by employees addition over all prime resulting in more allinclusive group insurance plan.
b) the employees have their choices of selecting better group plans
c) Eliminate some immoderate claims, which creates high palpate ratios causing growth of prime when group plan come to be renewed.
d) In Canada, if the employees pay health care premiums and the prime exceeds 3% of their dutible revenue for the year, 17% of the number in excess of the 3% will be returned as a tax credit.

2. Disadvantage
Employees must pay quantum of their share of prime out dutible income.

Ii. Non contributory plan

Under this type of plan, no contributions are required of the employees, all group insurance prime are paid by employer.

1. Advantages
a) Employees do not conduce to the plan cost therefore, lower paid employees can participate in the same level of care as the more extremely paid employees.
b) Most of owner paid all group insurance has lower management costs and easy to setup and maintain.
c) Premiums are tax deductible for the owner and only the life insurance premiums are a dutible advantage to the employee.
d) All employees are automatically covered.

2. Disadvantages
a) Plan commonly not as allinclusive as contributory plan
b) Benefits received as payments under short term and long term disability group plan are dutible to the employee.
c) prime paid on profit of employees may be added to the dutible income.

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