How to Set up a Health Insurance in QuickBooks Online

QuickBooks Payroll Software has eased the way payroll activities are compiled and completed within small to medium-sized business organizations. These complex tasks take hours and hours to get streamlined and completed if done manually, but with QuickBooks Payroll in hand, users can now get rid of wasting hours over these tedious but imperative tasks as the software automatically handles payroll tasks without much interference from the employer.

QuickBooks Payroll helps to prepare the salary and pay slips of the employees without any fuss, consisting of many different heads and sub-heads. One such head is about Health Insurance – its contributions and deductions.

How to set up health insurance contributions and deductions in QuickBooks Payroll

Users can easily set up deductions under paychecks for their employees to automatically pay for the health insurance plan. Users can also set up contributions by the company towards the Health insurance plan as well, for which the user needs to follow the steps highlighted below:

• Open your software and locate the Employees option from the menu bar on the left side of the window.
• Select the employee for whom a contribution needs to be made and then click on the Edit option.
• From the new window, select the option stating ‘Does this employee have any deductions?’ followed by clicking on the icon in the shape of a pencil for the edit function.
• Alternatively, the user can also select the option of ‘Add a new Deduction’ to add.
• From the drop-down menu of Deduction / Contribution, select the option labeled New Deduction / Contribution.
• Next, click on the Health Insurance tab from the drop-down menu of Deduction / Contribution Type.
  • In the next window labeled Type, click on any one of the following options:
    Vision Insurance
    Medical Insurance
    Dental Insurance
• The next step is to provide a label in the form of the name and description of the Health Insurance plan.
• Now, in Amount per Pay Period, click on either $ amount or percent of the total gross pay followed by putting in the actual amount or percentage needed to be contributed.
• Users can edit the amount while generating the paycheck.
• Furthermore, the user can also mention the actual annual amount of deduction the employee can opt for or the company will contribute.

Why do you need to set up health insurance deductions in QBO Payroll

If you use QBO for accounting, it doesn’t make sense to have separate accounting processes just for health insurance deductions. By syncing health insurance deductions with your company’s overall expenses, it becomes easier for your accounting team to keep proper track of every employee’s healthcare expenses.

Setting up health insurance deductions in QBO means that you can include the health insurance deductions of every employee in their payroll. Therefore, when the contract of the employee comes to an end or when the employee leaves the company, you can easily discontinue the health insurance deduction associated with his/her payroll.

Factors to Consider Before Setting Up Health Insurance Directions

It’s important to buy employee health insurance packages before setting up health insurance deductions in QuickBooks. This will help you make sure that you have health insurance policies in place when setting up the deductions. Also, it’s important to have already set up employee payroll using a premium version of QuickBooks.

Types of Health Insurance Plans & Premiums in QuickBooks Payroll

Lastly, the user needs to narrow down the option of taxing the premium amount and save the given information. Payroll taxes are tricky business, and thus, to avoid any sort of penalty, users should narrow down to one type of premium from the following options:

• Pre-Tax Insurance Premium – This option is selected in a scenario wherein the premium amount is deducted from the gross pay/salary of the employee. This premium is shown under the W-2 form of the employee as part of Employee Pre-Tax Contribution checked under Box 12 without being included in State and Federal Wages. However, if the pretax contribution of the employee is taxable at the local or state level, then it will be shown as part of taxable wages.
• Taxable Insurance Premium – This option is clicked in terms of the premium amount being deducted from the Net salary of the employee. They are not selected under Form W-2.

Once the appropriate option is chosen for the premium amount, the process will be completed by selecting an OK option. The moment the Health Insurance Deduction / Contribution is set for one employee, the same process can be followed for other employees.