How to Set up health insurance contributions and deductions in QB Payroll

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.

User Navigation

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.

Users can easily set up deductions under paycheck 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:

Total Time: 10 minutes

Step One

Open your software and locate the Employees option from the menu bar on the left side of the window.
Step Two

Select the employee for whom a contribution needs to be made and then click on the Edit option.
Step Three

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.
Step Four

From the drop-down menu of Deduction / Contribution – select the option labeled New Deduction / Contribution.
Step Five

Next, click on the Health Insurance tab from the drop-down menu of Deduction / Contribution Type.
Step Six

In the next window labeled Type, click on any one of the following options:
💠 Vision Insurance
💠 Medical Insurance
💠 Dental Insurance
Step Seven

The next step is to provide a label in the form of the name and description of the Health Insurance plan.
Step Eight

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.
Step Nine

Furthermore, the user can also mention the actual annual amount of deduction the employee can opt for or the company will contribute.

Types of Health Insurance Plans & Premiums in QuickBooks Payroll

Lastly, the user needs to narrow down the option of taxing the premium amount and saving 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 Health Insurance Deduction / Contribution is set for one employee; the same process can be followed for other employees.

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