Employers know that a quality healthcare plan attracts the best workers, keeps employees safe and healthy, and inspires loyalty among the workforce. From the employees’ point of view, a healthcare plan helps them to protect themselves and their families, and assists in managing their budgets.
Most employers strive to provide a healthcare plan for these reasons, among others. But of course, you must also watch your own budget. Finding the right healthcare plan to meet employee needs while also managing your own bottom line can pose a challenge. A Premium-Only Plan, or Section 125 plan, can help both of you meet your goals.
When used in conjunction with employer-sponsored group healthcare plans, Premium-Only Plans allow employees to pay their own healthcare premiums with pre-tax dollars. That means each payday, healthcare plan premiums are deducted from employee paychecks before taxes. Taxes are then taken on the rest of their income. Using this strategy, some workers are able to reduce their federal income taxes by as much as 40 percent!
Employers can save money, too. You will not pay any FICA/FUTA taxes on wages that employees use to pay their healthcare plan premiums. Utilizing Premium-Only Plans can reduce your own tax bill by a considerable amount.
Choosing the right healthcare plan can pose a challenge for both employers and employees. But if you’re seeking a quality plan option that also helps to save both of you money with regard to income taxes, a Premium-Only or Section 125 plan can provide a valuable opportunity. Give us a call to discuss this option in more detail. We will explain more about how it works, and help you calculate the potential savings so that you can judge the difference for yourself.