>Benefits are just an appealing name given to anything an employer chooses to spend money on instead of paying you that money (and the trade typically works in their favor).
Nominally, this works out for both employer and employee, since those benefits can be paid for with pre tax money. Really, it gives big businesses an advantage over small businesses that cannot afford the costs to administer these benefits or the non discrimination testing. And it advantages businesses over employees by obfuscating what their true pay is.
It also gets hairy for a married couple where one spouse is a W-2 employee with the standard retirement contribution and subsidized health insurance benefits, but the other does not.
> those benefits can be paid for with pre tax money
The standard deduction largely gobbled up this scenario - paying towards health insurance premiums is tax deductible, but unless you can itemize beyond that standard deduction, it no longer matters. So in that case, yes there's somewhat of an advantage. Overall it can lead to complicated math trying to determine which scenario (W2 or 1099) will leave you with the most money/benefits.
And yes - with things like pooling resources, big business can often get better negotiated healthcare premiums than small business, let alone individuals.
For couples, it just varies by situation. Sometimes the W-2 member of the couple can get family health insurance, if that's a better deal than what the 1099 can get. If that's not an option, then yes, the 1099 member has to fend for themselves and buy an individual health insurance plan.
> The standard deduction largely gobbled up this scenario - paying towards health insurance premiums is tax deductible
It is not deductible, unless you are self employed. For example, a W-2 person working for a business with less than 50 employees which does not offer employer subsidized health insurance is not allowed to deduct health insurance premiums. You also cannot deduct if you are even eligible under a spouse’s employer subsidized health plan (although I do not know how they could audit you and find this out).
> And yes - with things like pooling resources, big business can often get better negotiated healthcare premiums than small business, let alone individuals.
Not really, healthcare.gov premiums and employer premiums are pretty close for the most part. The difference is in being able to pay with pre tax versus post tax income.
> For couples, it just varies by situation. Sometimes the W-2 member of the couple can get family health insurance, if that's a better deal than what the 1099 can get. If that's not an option, then yes, the 1099 member has to fend for themselves and buy an individual health insurance plan.
I was referring to the complications arising from determining limits for retirement contributions when one spouse is W-2 and the other is non W-2. For most people this will introduce the need for an accountant. For the amount of money that the vast, vast majority of Americans earn, I think they would easily come out ahead being W-2 employees with subsidized benefits via large employers.
Nominally, this works out for both employer and employee, since those benefits can be paid for with pre tax money. Really, it gives big businesses an advantage over small businesses that cannot afford the costs to administer these benefits or the non discrimination testing. And it advantages businesses over employees by obfuscating what their true pay is.
It also gets hairy for a married couple where one spouse is a W-2 employee with the standard retirement contribution and subsidized health insurance benefits, but the other does not.