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Thread: Paying for health care insurance has another side to it

  1. #1
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    Default Paying for health care insurance has another side to it

    I know healthcare payments get deducted before taxes but there is a catch. The money that you pay for health insurance doesn't get factored into your salary when it comes to pension when you retire. Your pension will be less than if you didn't pay for health insurance.

  2. #2
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    Default Re: Paying for health care insurance has another side to it

    I'd rather not pay the taxes.

  3. #3
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    Default Re: Paying for health care insurance has another side to it

    I know matclone. I am just saying I wasn't aware of it until someone pointed it out to me. A man that makes $50K per year has only $43K listed as the salary towards his pension.

    Your employers don't mention this little fact when they happily proclaim that your insurance fee will be deducted before taxes.

  4. #4

    Default Re: Paying for health care insurance has another side to it

    I'm wondering what pension you're referring to, Big. I don't know many people that have pensions anymore, so I can't ask a bunch of people to see what their experiences are.

    I do have an uncle who worked for the Whirlpool Corp. when they offered pensions. His pension amount DOES include his gross income, which included his insurance premiums.

    But, I can certainly see how Social Security would not include that figure, because the premium amount was exempt from the FICA tax, thus was not paid into the system. Similarly, those with incomes over 90-some thousand dollars/yr will only get a pension that is commensurate with that figure, becaue the amounts over that were exempt from the tax.

    My wife's public school retirement plan (which is not a pension) is an employer-matched 403(b) account, which accumuates wealth regardless of your income level. However, it may vary up or down with the stock market and personal yearly contributions are limited by law.

  5. #5

    Default Re: Paying for health care insurance has another side to it

    Quote Originally Posted by Big View Post
    I know healthcare payments get deducted before taxes but there is a catch. The money that you pay for health insurance doesn't get factored into your salary when it comes to pension when you retire. Your pension will be less than if you didn't pay for health insurance.
    Speaking as someone who doesn't have a pension, I'm lost. Do you think that this is a good thing, or a bad thing. Why?

  6. #6

    Default Re: Paying for health care insurance has another side to it

    Mine is based on pay and years of service. Here's how it is spelled out:

    What's Included - Annual compensation includes:
    Base pay, Bonuses, Vacation pay, Holiday pay, Sick pay, Commissions, Before-tax contributions to the Health Care Spending Account (Section 125), Before-tax contributions to the 401k, Employer payments for temporary military service, Contributions that provide for any qualified transportation benefits that comply with Code Section 132

    What's Not Included - Annual compensation doesn't include:
    Prizes or awards, Unused vacation pay, Service allowances, Stay bonuses, Lump-sum payments, Dividends on shares of restricted stock, Moving or living expense reimbursements, Foreign allowances, Any earnings under defined compensation plans, Any amount paid after death, disability, termination, or retirement, Illness or disability pay, Severance pay, Pay from an alternate plan, Profit sharing benefits, Stock contracts, Deferred compensation, Pay from the Senior Executive Multi-Year Bonus Program, or other welfare plan, Contributions from your employer to any retirement plan or under FICA, Expense allowances and reimbursements, Flex cash amounts, Long-term incentive plan payments, YES and other cash awards, Tuition reimbursement, Moving , Completion or termination bonuses, Signing bonuses, Car allowances.

    Guess I better get back to work or I won't have any benefits at all.
    "All my life I have tried to pluck a thistle and plant a flower wherever the flower would grow in thought and mind." -- Abraham Lincoln

  7. #7
    Super Moderator UGLY's Avatar
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    Default Re: Paying for health care insurance has another side to it

    My Wifes pension is based on age and years of service and if she works until she is 55 and has 30 years on the job she will recieve roughly 98% of her highest grossing year for the rest of her life plus we have a 401K and a trust.

    I think that if we look at the cost of an individual paying for healthcare on their own and the cost to a pension because it may not be factored in to your pay, we would all take the healthcare from the company.

    We pay 300 a month for our family and it includes health, dental, vision, pregnency, and emergency services. Some people could pay 1,000 a month for the same coverage and te same size family. Multiply that by 25-30 years not including variables such emergencies. In fact my brother in law who chose to pay his won health care is finding this out. He and his wife did not realize the plan they chose does not cover pregnancy and they are having another child at their own expense.

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    Default Re: Paying for health care insurance has another side to it

    Ugly,

    Even at $300 per month for 30 years you end up paying $100K which will be taken from your pension. I am not arguing one way or another but just pointing out the negative of paying for health insurance.

  9. #9
    Super Moderator UGLY's Avatar
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    Default Re: Paying for health care insurance has another side to it

    Big I see what you are saying but like I said compare that to 360,000 if you pay it yourself. Maybe it equals out depending on your retirement plan.

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