#1 Any compensation paid to employees is taable income. Consult with your ta accountant to determine the best way to show this income' on a W2. Since the employees are responsible for acquiring their own health insurance, this compensation is simply a bonus and not a health insurance epense to the company. #2 That is between you and the employee and their is no law that governs the policy for reimbursement of employee paid health insurance. You are essentially providing them an increase in salary to allow them to afford their own health insurance. #3 No — May 28, 2009 @ 1:15 pm '