Every business owner knows that health insurance is an important benefit to attract and retain quality employees. But it also comes with a great opportunity to deliver tax savings measures for both your business and those that work there. What if I told you there is a way to save money on health insurance premiums while increasing take-home income—which leads to happy employees in a happy workplace.
A Section 125 Premium-Only-Plan (POP) is part of the IRS Code that allows employees to convert taxable cash benefits (wages) into non-taxable benefits not included on a W-2 form. Also known as a “Cafeteria Plan,” with a POP you may choose to pay qualified benefits premiums before taxes are deducted from employees’ paychecks:
- This way, employees save on local, state, and federal income taxes—including Social Security and Medicare!
- While employers save the matching Social Security 6.2%, and Medicare 1.45%, for a total of 7.65%!
Be aware that the penalties for non-compliance with a ‘Cafeteria Plan’ can be stiff, but the process of setting and maintaining such a plan can be straightforward if you seek the assistance of a qualified professional.
This one is a no-brainer, and we are here to make sure your Section 125 POP documents are updated and in compliance so you and your employees can save money and run a better business.
Call ConnectPay and ask for Rick Mullett: