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Sibyl
Level 3

How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

 
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Best answer January 29, 2020

Best Answers
Sibyl
Level 3

How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

I figured it out.

From section 5 in pay section of each employee, select "add new deduction", under deduction/contribution select "new contribution/deduction" again! Then under c/d type: select health insurance, type: medical insurance, enter provider or whatever you want it to say on pay stubs, select amount for employee, employer then select taxable or pre-tax and OK!

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8 Comments
KlentB
QuickBooks Team

How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

Let me help you in setting up the Section 125 cafeteria benefit plans, Sibyl.

 

With this plan, your employees can pay medical, dental, and vision insurance premiums with pretax paycheck deductions. You follow the steps below in setting this up:

 

  1. Select Workers from the drop-down menu.
  2. Click the Employees tab.
  3. Choose an employee from the list.
  4. Click the Edit ✎ icon (next to Pay).
  5. In section 5, select + Add a new deduction.
  6. Select Health Insurance from the Deductions/contributions ▼ drop-down menu and Medical Insurance for the Type.
  7. Choose $ amount or % of gross pay and enter the $ amount or percentage from the Amount per pay period ▼drop-down.
  8. Do the same for the Company-paid contribution if applicable.
  9. Click OK, then hit Done.

I encourage you to visit this link to learn more about how this health insurance plan work in QuickBooks: Section 125 cafeteria plans.

 

Here's an article that will help in confirming an employee's wages and benefits for year-end reporting: Year-end Reports Employee wages and benefits reports.

 

Fill me in if you have any other concerns or further questions about deductions and contributions. The Community will always have your back.

Sibyl
Level 3

How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

Please share how to properly set up the "Existing Deduction" that I am to select from the contribution/deduction drop down list.  FYI  I do not want the information to be printed incorrectly on the W-2s. This is for a pre-tax health and medical insurance plan and NOT an HSA.

Catherine_B
QuickBooks Team

How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

Let me walk you through in settings up your Pre-tax Health Insurance, Sibyl.

 

Here's how:

  1. Go to the employee's profile. 
  2. Select on the employee and go to section 5, click + Add deduction link.
  3. Select these options from the drop-down: 
      - Deduction/contribution or garnishment: Deduction/contribution
      - Deduction/contribution type: Health Insurance
      - Type: Medical Insurance
  4. Enter the provider and the amounts for Employee and Company-paid fields. 
  5. Select Pre-tax insurance premium.
  6. Click OK

Once you've run payroll the insurance is deducted from the employee's gross pay before Medicare, Federal, and State taxes are calculated. 

 

I'll be here if you need more help.

Sibyl
Level 3

How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

Do you mean section 4?  Health Insurance is not an option in the drop down list.  Please follow your own instructions to make sure it works before posting them. It's very frustrating when they are wrong. 

Sibyl
Level 3

How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

I meant to say, did you mean section 5?

Sibyl
Level 3

How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

I figured it out.

From section 5 in pay section of each employee, select "add new deduction", under deduction/contribution select "new contribution/deduction" again! Then under c/d type: select health insurance, type: medical insurance, enter provider or whatever you want it to say on pay stubs, select amount for employee, employer then select taxable or pre-tax and OK!

View solution in original post

JamiePhillips
Level 1

How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

Once this is set up, how do I get the money to the employee? I have it set up exactly as described above.

 

Hypothetical example: As a benefit, I (employer) want to pay $100 per paycheck towards medical as actual money in each employee's paycheck. How do I do that?

 

When I run payroll, under employer contributions, the $100 appears, but it is not reflected in the payment.

Jovychris_A
QuickBooks Team

How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

Hi there, @JamiePhillips.

 

Let me add some details on how you can include this contribution to the paycheck.

 

If you wanted to pay for the deduction that you incurred in each employee, using a non-taxable item will be your option.

 

To do this, you can update and 0 the amounts for each employee's deduction/contribution by following these steps below:

  1. From section 4, click the Pencil icon beside the employee's deduction/contribution.
  2. 0 the amounts on the Employee deduction.
  3. Click OK to save the setting.

This way, it will reflect on each paycheck as an actual money.

 

Also, I'll add this article as your reference in adding and updating deductions and contributions for your employees: Add or edit a deduction or contribution.

 

For additional reference, you can learn more about setting up a retirement plan deductions and contributions.

 

Feel free to leave a comment below if you have more questions. I'm always here to help. Take care!

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