Accountant or Tax question about insurance?

Question

My husbands company will be paying for private insurance for our family. Because it is private insurance the money has to be drafted out of our personal account. What I need to know is, how can they cut us the whole amount without the taxes coming out as income. The city will pay the taxes but we need to know how this can be done and not shown as income. Is this like a stipend? We are clueless on this so any help by someone who has experience with this is greatly appreciated. We live in Texas, USA

Answer 1

I'm assuming that your husband is working for the city and is covered by a cafeteria plan.

A cafeteria plan is a separate written plan maintained by an employer for employees that meets the specific requirements of and regulations of section 125 of the Internal Revenue Code.  These plans allow employees to participants to receive certain benefits on a pretax basis.  In your case, the insurance that is being provided should be a deduction from his payroll.  Even though the insurance is for the whole family Section 125 plans can cover the insurance of the spouse and dependents of the employee.  

If you need more information, search Section 125 plan or cafeteria plan on the IRS website and I am sure you will find what you are looking for.