Does Health Insurance From Work Come Out of My Paycheck?

by Michael Keenan
Getting insurance through your employer can save you on taxes even though the premiums come out your paycheck.

When you sign up for health insurance through your employer, you may see a decrease in your take-home pay depending on your company and the plan you select. Often, the company will pay some, but not all, of the cost, with the rest coming out of your paycheck. For example, if you sign up for a plan that costs $300 per month and your employer covers $200, your paycheck drops by $100 to cover the rest of the premium.

Tax Implications

While you might not like seeing the smaller check each month, it's actually to your benefit to have your health insurance premiums come out of your paycheck. If you paid out of pocket, those dollars you used to pay would be included in your taxable income for the year. However, when you pay through your employer, those same costs aren't counted as taxable income.

About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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