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Intuit

Set up a payroll item for an insurance

Overview

This article explains how to create a payroll item for an insurance benefit that you can add to employee profiles and paychecks.

Payroll items in this category include:

  • 125 - Health Insurance (pre-tax)
  • 125 - Dental Insurance (pre-tax)
  • 125 - Other Premium Only Plan (pre-tax)
  • 125 - Medical Care FSA (pre-tax)
  • 125 - Dependent Care FSA (pre-tax)
  • Health Insurance (taxable)
  • Dental Insurance (taxable)
  • Vision Insurance (taxable)
  • Other Employee-Paid Insurance (taxable)
  • Taxable Group Term Life
  • Medical benefits for officers or 2% shareholders (S Corporations only)

Note: If you are not sure what type of insurance plan you have, contact the plan administrator at your insurance company.

Details

To set up an insurance benefit item using EZ setup:

  1. Choose Lists > Payroll Item List. Click the Payroll Item button and select New.
  2. Select EZ Setup and click Next.
  3. Follow the onscreen setup instructions, which prompt you to answer a series of questions based on the item type.

Note:

  • After you create a payroll item, Intuit recommends you edit the payroll item to ensure all necessary information is entered.
  • On the right side of each screen there are Help topics to assist you with setup.

To set up an insurance benefit item using custom setup:

  1. Choose Lists > Payroll Item List. Click the Payroll Item button and select New. 
  2. Select Custom Setup > Next.
  3. Select Deduction and click Next.
  4. Name the deduction item and click Next. This name appears on pay stubs and payroll reports.
  5. Enter the Agency for the employee-paid liability, and the account number and the liability account for the payroll item. Click Next.
  6. Click Tax Tracking Type and select the type required for the correct tax classification. Click Next.
    Note: In most cases, the Tax Tracking Type is None for post-tax health insurance deductions and Premium Only/125 for pre-tax health insurance deductions. Contact your Health Insurance Administrator to determine the taxability of the item. Click the following links to determine the Tax Tracking Type for Health Savings Accounts and Flexible Spending Accounts or S Corp Medical.
  7. In the Taxes window do not change any of the taxes and click Next.
    Note: QuickBooks Desktop auto-selects the correct taxes. Do not adjust them.
  8. In the Calculated Based on Quantity window, select Neither and click Next.
  9. In Gross vs. net, if the amount of deduction is a percentage (%) of employee's gross earnings, select gross. If it is a fixed dollar amount select net. If calculation varies from one employee to another, you will need to set up separate items. Taxability of item is based on tax tracking type selected, not by gross vs. net calculation.
  10. Enter a default rate only if all employees pay the same amount for health insurance.
  11. Click Finish.
  12. Add the item to the appropriate employee profiles and enter an amount for each payroll deduction.

Related Articles

Setting Up a Section 125 Health Insurance (Cafeteria Plan)
Set up a payroll item for Flexible Spending Account

Apply S Corp Medical at year end for corporate officers

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