HEALTHCARE ORGANIZATIONS

      HOSPITAL EMPLOYEE BENEFITS PLANS AND STOCK

                                                  OPTIONS

By: Dr. David Edward Marcinko; FACFAS, MBA, CMP™

[Editor-in-Chief]

By: Dr. Gary L. Bode; CPA, MSA, CMP™

Chief Accounting Officer

[Institute of Medical Business Advisors, Inc]

Introduction

 

This special bonus chapter for 2010 examines hospital employee benefits and equity participation, both from the healthcare organization employer and employee perspectives. 

 

Employee benefits include employer payment of personal expenses on behalf of employees, as well as methods for deferring taxation of compensation earned by employees. If a public hospital, stock options allow employees to benefit from the appreciation in the value of employer securities without having to deplete cash resources to purchase shares at the time appreciation begins.

 

Hospital Employee Benefits

There are three categories of benefits that hospital employers typically provide to their employees:

·       Those that are totally income tax-free. Some of these are still taxable for FICA (Social Security and Medicare).

·        Those that are not taxed at their full economic value, or are taxed at a special preferential rate.

·        Those in which a tax liability is not incurred until sometime after the employee receives the benefit.

The following are benefits typically provided by hospitals that are tax-free to employees:

·          Group term life insurance

·          Accident and health benefits

·          Moving expense reimbursement

·          Dependent care expenses

·          Meals and lodging

·          Adoption expense assistance

·          Use of athletic facilities

·          Employee awards

·          Educational assistance

·          Qualified employee discounts

·          No additional cost services

·          Retirement planning service

·          De minimus benefits

·          Qualified transportation benefits

·          Working condition benefits

·          General fringe benefits and miscellaneous specialized provisions.

All tax-free benefits have varying conditions, which can include:

·          What constitutes a benefit to qualify (as defined by the IRS)

·          Monetary caps

·          IRS reporting requirements

·          Exclusion from what type of taxes (income, FICA and FUTA).

Which employees are excluded and what constitutes an employee to qualify? The most commonly restricted employee types are S Corporation employees who owned greater than 2% of the corporation’s stock in the taxable year, highly compensated employees and key employees.      

Subscribe: http://healthcarefinancials.com/Subscribe.aspx

TABLE OF CONTENTS.pdf