Using tax-free dollars is the smarter way to pay medical expenses
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Premium Conversion Program
How YourFlex can save money for both your company and its employees
Premium-only Plans (POP plans) are a tremendous tax-saver for companies by allowing employees to pay their share of any group health costs with pre- tax dollars.
The decision to use POPs is typically a no-brainer because employers save much more in taxes than it cost to set up and administer. The employees save because they are paying less FICA, state and federal taxes. The company saves by paying a smaller matching FICA tax.
A fill-in-the-blank approach to POPs may put your firm’s savings at risk. Using YourFlex not only makes offering this program easier, it also reduces the company’s risk of losing its tax-savings by being disqualified by the IRS.
Instead of a fill-in-the-blank approach, Benefit Solutions provides a careful analysis and then develops customized plan documents managed by a Certified Public Accountant experienced in POP programs.
Benefit Solutions’ YourFlex POP services include:
• Set-up of all POP plan documents with updates each year, including suggested board minutes authorizing the plan
• All required discrimination testing, clearly documented annually
• Consulting with human resource staff by a CPA with years of employee benefit experience
• Seamless coordination of the POP plan with other YourFlex programs.
How is money saved?
Employees save money by being allowed to pay for certain expenses without having to first pay federal, state or social security taxes on their salaries. Savings have ranged from 28 percent to 41 percent, depending on the tax bracket.
Employers save by not having to pay matching Social Security taxes. Even after admin costs, companies providing their employees this benefit still save money.
Compute your organization's savings by adding up your total group health-related insurance premiums and multiply by 7.65 percent.
Example
Annual Costs-Contributions
Health Insurance $40,000
Dental Insurance $15,000
Vision Insurance $5,000
Total $60,000
Company Matching FICA Rate x7.65%
Annual Payroll Tax Savings: $4,590
