Section 125 Plans
Section 125 plans allow you to pay for certain employee group benefits (like medical and dental) with pre-tax dollars, saving you money that would normally be paid in taxes. Our EasyChoice Take Care plans come in two basic forms: “Premium Only Plans” (POPs) and “Flexible Spending Account Plans” (FSAs).
What Are Premium Only Plans?
POPs reduce both employee and employer taxes. By paying their share of group insurance premiums with tax-free dollars employees save 25 to 40 percent, depending on their tax bracket. Employers typically save on the matching social security and federal unemployment taxes of nearly 8 percent.
What are Flexible Spending Account Plans?
The FSA is similar to the POP. It allows employers to create a menu of pre-tax options including commuter, medical and dependent care. In addition, employee accounts can be created to pay for related out-of-pocket expenses. Our FSAs even offer a debit card for employees to access their pre-tax monies. These accounts include:
- Dependent Care Reimbursement: for employees with day care or senior care needs
- Medical Expense Reimbursement: covers your out-of-pocket medical expenses not covered by insurance; also pays for deductibles, co-payments, prescriptions, dental expenses, vision care, glasses and contacts
- Commuter Expense Reimbursement: pre-tax up to $205 a month in mass-transit and $105 parking fees
Either option provides secure and beneficial options for savings.