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Health Insurance

Rexedgar

Yo-Semite!
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My buddy is getting ready to close on a business. The present proprietor wants my buddy to continue to pay his family’s insurance premiums through the business, while he reimburses my friend. Something fishy to me. What are the opinions of those with insurance/legal experience?
 
My buddy is getting ready to close on a business. The present proprietor wants my buddy to continue to pay his family’s insurance premiums through the business, while he reimburses my friend. Something fishy to me. What are the opinions of those with insurance/legal experience?

I'm no expert, so take this with a grain of salt.

But I don't see a problem with it, IMO it's not much different than a retiree still getting his/her HI through their ex-employer.
 
My buddy is getting ready to close on a business. The present proprietor wants my buddy to continue to pay his family’s insurance premiums through the business, while he reimburses my friend. Something fishy to me. What are the opinions of those with insurance/legal experience?

That is likely illegal since it is basically a federal income tax (FIT) scam. The prior owner gets unreported income, which the current owner writes off their taxes (100%) as a business expense. Even if that reimbursement payment is later claimed as business income (which is highly doubtful) it is still a wash for FIT purposes.

If the prior owner had paid that premium directly to the (or a different) insurance company it would only be tax deductible to the extent that it exceeded 10% of his/her AGI making it, at best, partially reimbursed at their highest marginal FIT bracket rate (likely 20% or less).
 
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I'm no expert, so take this with a grain of salt.

But I don't see a problem with it, IMO it's not much different than a retiree still getting his/her HI through their ex-employer.

How many retirees pay 100% of their retirement benefits back (under the table?) to their former employers?
 
My buddy is getting ready to close on a business. The present proprietor wants my buddy to continue to pay his family’s insurance premiums through the business, while he reimburses my friend. Something fishy to me. What are the opinions of those with insurance/legal experience?

Sounds like the former owner wants in on the group rate the company can get, without being part of the company. Seems shady as hell, if not straight-up insurance fraud. At the very least, your friend should consult an attorney.
 
How many retirees pay 100% of their retirement benefits back (under the table?) to their former employers?

None. Most of the time the former employers pay all or part of the retirees HI.. That's my point. The retirees still get group rates and benefits from their former employer.
 
None. Most of the time the former employers pay all or part of the retirees HI.. That's my point. The retirees still get group rates and benefits from their former employer.

Some citation is required for that (bolded above) assertion. That may be true for most public and/or union employees, possibly even some very large employers, but I doubt that most employers (which are small businesses, BTW) do that.
 
Some citation is required for that (bolded above) assertion. That may be true for most public and/or union employees, possibly even some very large employers, but I doubt that most employers (which are small businesses, BTW) do that.

My point has nothing to do with the size of a company. My point is some companies keep their former employees in their group HI 'pool'. So I can understand why this former owner wants to stay in his former business group pool.
 
My point has nothing to do with the size of a company. My point is some companies keep their former employees in their group HI 'pool'. So I can understand why this former owner wants to stay in his former business group pool.

My point was that "some" is not "most". I can also understand why someone wants to save money, but the owner of a business asking for a benefit that they did not offer to their own ex-employees is a bit much.
 
My point was that "some" is not "most". I can also understand why someone wants to save money, but the owner of a business asking for a benefit that they did not offer to their own ex-employees is a bit much.

Why are you saying his ex-employees were not offered group HI? If he's asking to stay in his former business pool, sounds like he had a group HI when he owned the business too.
 
Why are you saying his ex-employees were not offered group HI? If he's asking to stay in his former business pool, sounds like he had a group HI when he owned the business too.

Because the prior owner was offering to pay the new owner back (under the table?) for offering this (new?) benefit. Had it been "company policy" to pay ex-employees such benefits that would not have been necessary.
 
Because the prior owner was offering to pay the new owner back (under the table?) for offering this (new?) benefit. Had it been "company policy" to pay ex-employees such benefits that would not have been necessary.

We seem to be talking pass each other now.

I also never said it was THIS company's policy. I said other companies do similar things with their ex-employees. Maybe not 'under the table', but it's basically the same type of 'perk'.... So I see no problem with the new owner letting the prior owner stay on the companies group plan. If the new owner isn't paying ANY of the prior owner's premium, all the prior owner is getting is a reduce rate/premium because he's staying in a group plan.
 
My buddy is getting ready to close on a business. The present proprietor wants my buddy to continue to pay his family’s insurance premiums through the business, while he reimburses my friend. Something fishy to me. What are the opinions of those with insurance/legal experience?

My guess would be he or someone in his family has a pre-existing condition and possibly couldn't get insurance cheaper if at all. Otherwise it would make no sense as often individual plans are cheaper than group plans.
 
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