Premium Only Plan
You can add an employee benefit that actually saves both the employee and employer money! A Section 125 Premium Only Plan allows your employees to pay their portion of the insurance premium with pre-tax dollars.
An Employee Benefit
By participating in the Premium Only Plan*, your employees can save in federal, state and FICA taxes—that's up to a 30 percent savings, depending on their actual tax rate.
It’s simple: The employees’ portion of the insurance premium is payroll deducted before taxes. They don't have to file any additional tax forms as their W-2 will simply reflect the lower taxable income. This savings can help them offset the increasing cost of medical insurance.
Employer Savings
Because participating employees reduce their taxable salary, this translates into lower FICA payments and other payroll taxes for your company.
The following example shows the approximate tax savings for a company with 30 participants in the Premium Only Plan.
Insurance Premium
(for 30 participants with $100 insurance premium) |
$3,000 |
| Monthly payroll reduction |
$3,000 |
| Annual payroll reduction |
$36,000 |
| Annual FICA savings @ 7.65% |
$2,754 |
While the employer’s savings would be $2,754 ($36,000 @ 7.65 percent), your employees would save $10,674 annually in federal, state and FICA taxes ($36,000 @ 29.65 percent).
What Does My Company Receive?
We will provide you with all the information necessary to implement this program:
- A sample letter to your employees
- A sample enrollment form
- A model Plan Document
- A Summary Plan Description to be given to all plan participants
- Who to contact for plan support
- Operational procedures information, including:
- How to enroll your employees
- How to set up Your payroll to accommodate Section 125
- Data needed and procedures to perform Key Employee concentration test
How Much Does It Cost?
First year: $200 (receive a $50 discount if enrolled in a PacificSource health plan)
Annual renewal: $150
How to Get Started
Your first step is to complete the brief Service Agreement stating which services you would like us to perform, and when you would like to start. Return the form to us via mail or fax, and you will receive all of the necessary information in a personalized I. R. C. Section 125 Operations Manual for easy implementation and tax savings.
Please submit your completed service agreement to:
Mail: PO Box 70168, Springfield, OR 97475
Fax: (541) 485-7488 or (800) 575-1109
*Please note: Premium Only Plans are for groups who do not have a full Flexible Spending Account (FSA) in place. FSAs include the Premium Contribution language in the Plan Document. A separate POP Plan Document is not necessary.