The IRS wants everyone to have health insurance! To encourage employees to elect coverage through their employers they allow employers to offer a Pre-Tax Plan know as a Section 125. This allows you to elect to pay for heath premiums with pre-tax earnings.
Outstaffing provides all eligible employees an excellent employee benefit that will increase your take-home pay. The benefit is called the Premium Savings Plan (also referred to as a Section 125 or Cafeteria Plan). The plan allows you to pay your FULL health insurance related premiums with pre-tax dollars. There are a few additional points you need to know about the plan:
- Participation does NOT affect the cost of your health benefits,
- Annual tax withholding (W-4) statement will reflect reduced taxable income,
- Dependent Life insurance does not qualify,
- Social Security benefits will be reduced upon retirement, but the impact will be minimal,
- Weekly Income benefits (LTDI/STDI) will be taxed if premiums were deducted before tax.
