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A Section 125 Flexible Benefit Plan offers a budgeting tool that helps pay for out-of-pocket medical, dental, and dependent care expenses not covered by employer benefit plans. Also, like a Premium Only Plan (POP), a Flexible Spending Accounts (FSA) helps pay for itself by increasing employee take-home pay while decreasing employer payroll taxes.
Employees decide how much of their salary should be set aside, before taxes, to pay for un-reimbursed expenses, like co-payments, deductibles, and even some over-the-counter medication. The amount is automatically deducted from their paycheck every pay period and is credited to their FSA account. Each time they incur an expense they simply submit a claim and a reimbursement is made from their account. |
If your employees pay a portion of their group insurance premiums, there's a way to increase their take-home pay and reduce your payroll taxes at the same time. To achieve this your company can establish either a Premium Only Plan or a Flexible Spending Account.
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Allows employees to pay their share of premiums for health insurance, group term life insurance, disability insurance or cancer insurance with pre-tax dollars. |
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Allows employees to set aside a predetermined dollar amount in an account to cover eligible out-of-pocket health care and dependent day care throughout the year. There are two types of accounts: Health Care Flexible Spending Account and the Dependent Day Care Flexible Spending Account. |
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Offers employees the opportunity to pay for most child/dependent care expenses with pre-tax dollars that, in some cases, provides a more substantial tax savings than the tax credit you get when doing your tax return. |
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Allows employees to pay for common out-of-pocket medical expenses (not covered by insurance) such as deductibles, co-pays and vision and dental care with pre-tax dollars. |
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