Employers are finding new ways to offset the rising cost of health insurance by adding a Premium Only Cafeteria Plan
Cafeteria Plan Direct has seen an uptick in the number of Section 125 Premium Only Cafeteria plans implemented by employers across the U.S. With the rising cost of health insurance premiums and the possible repeal of Obamacare, employers are taking control by putting in the low cost $79 Premium Only Plan through Cafeteria Plan Direct and be able to deduct employee premiums pre-tax.
One of the most overlooked employee benefits for small businesses today is the Section 125 Premium Only Cafeteria Plan. These plans allow employees to withhold a portion of their salary on a pre-tax basis to cover the cost of qualifying insurance premiums. Because Section 125 Premium Only Cafeteria Plan benefits are both exempt from Federal and State income tax, an employee’s taxable income is reduced, and as a result, increases their take-home pay. And because the Section 125 Cafeteria Plan reduces employee gross income for purposes of income tax, the employer also sees a reduction in their payroll tax liability by eliminating matching FICA taxes of 7.65% and workers’ compensation (depending on your state).
As a result of the ever increasing premiums for health insurance, employers are looking for additional ways to lower costs for themselves and their employees without having to sacrifice the level of benefits they are currently offering. By setting up the Premium Only Plan, they get immediate results with the ability to now deduct health insurance premiums pre-tax.
Much to their delight, setting up a Premium Only Plan is very simple. Cafeteria Plan Direct now only can set up these plans, but after the employer completes a short data form, the plan is then put together with the specifics for that particular employer and emailed to them complete and ready for their signature!
Through the use of Cafeteria Plan Direct Section 125 Premium Only Plans, the cost of implementing a plan is recovered through tax savings during the first few months for all employers. And at a one-time cost of $79, it is another easy program to implement with immediate benefits for both the employer and employee.
The Internal Revenue Service (IRS) has announced the inflation-adjusted contribution limits for health savings accounts (HSAs) and health flexible spending arrangements (health FSAs) for tax year 2017.
2017 Contribution Limits
The tax year 2017 contribution limits for HSAs and health FSAs are as follows:
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