We have group health insurance. We get a bill, we pay the bill. It posts to the health insurance expense account under payroll. Health Insurance is 100% company paid. I set up the health insurance correctly showing employee portion 0.00 company contribution 100%.. So why then does the 100% company paid portion of the health insurance post to a payroll health insurance liability account? So now I have the premium in the expense account and the same in the liability account. What am I missing here? A QBO representative told me I needed to make this adjustment and remove it from the liability account.So what would be the offsetting entry?And why in the world... would a payroll service require me to make those adjusting entries with every payroll that is run.Under what circumstances does this entry to the liability account work correctly? Maye someone could explain that.PS totally understand the taxes and the tax liability account entries. No need to explain that. Paycheck>>>taxes posted to tax liability account>>> Pay quarterly taxes>>>> ALL WORKS OUT. Wait a minute..... So if the bill was posted to the insurance liability account as a negative liability instead of to the expense account, then when the payroll is run, it will offset the other entries. Is this the way its actually supposed to be under these circumstance?

Question

Why company pd health Ins. posts to a liability account when payroll iks run??

Forum|Forum|4 years ago
July 20, 2021
1 reply
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We have group health insurance. We get a bill, we pay the bill. It posts to the health insurance expense account under payroll. Health Insurance is 100% company paid. I set up the health insurance correctly showing employee portion 0.00 company contribution 100%..

So why then does the 100% company paid portion of the health insurance post to a payroll health insurance liability account? So now I have the premium in the expense account and the same in the liability account. What am I missing here? A QBO representative told me I needed to make this adjustment and remove it from the liability account.

So what would be the offsetting entry?
And why in the world... would a payroll service require me to make those adjusting entries with every payroll that is run.
Under what circumstances does this entry to the liability account work correctly? Maye someone could explain that.

PS totally understand the taxes and the tax liability account entries. No need to explain that.

Paycheck>>>taxes posted to tax liability account>>> Pay quarterly taxes>>>> ALL WORKS OUT.

Wait a minute..... So if the bill was posted to the insurance liability account as a negative liability instead of to the expense account, then when the payroll is run, it will offset the other entries. Is this the way its actually supposed to be under these circumstance?

john-pero

If 100% company paid tge only reason to ever include in payroll is so that the premium paid shows up as a note on the W2. It is only taxable to emoyee if it is a platinum Cadillac plan. And you could instead just add those numbers when creating the W2s.

Let me ask you this, does the liability it posts to equal to one pay period's obligation and summing up equal to the bill ypu do pay? If so, can you instead of entering a bill for insurance, pay tge bill amount against the accumulated liability.

Or remove it from payroll altogether

L

lisachAuthor

Yes. The monthly premiums equal the amounts that posts to the liability account. Yes that is why I wondering if I should post the insurance bill payment to the liability account. Checking account >DEBIT......Insurance Liability account>CREDIT. Then when the checks post the insurance transaction would post to offset that entry.

What I can't figure out is why it posts this way. And WHY OH WHY isn't there some kind of instruction or note or KB article reviewing this process and giving instructions on how to address it. And why a payroll program that charges as much as they do would require employers to then make manual entries to fix this.

Again what am I missing?

john-pero

If you deducted a 10 or 20 percent copay from the employees it might make more sense to you. And like I said, the only reason to include untamed fringe benefit in the payroll at all is due to a federal mandate that the value of the insurance be included in the W2

Before posting your bill for insurance to the liability look at the other half of the transaction to determine if it posts as expense. If it does, enter a Bill against the liability.

But before you do, see if it is included in payroll liabilities to pay or of ypu can more simply go into a section to set up the liability payment like sales tax

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