If your employees pay a portion of their health insurance costs, you may be able to reduce your payroll taxes, and give workers a little extra in their checks each and every week. How? By letting us handle payroll deductions for insurance premiums with a Premium Only Plan.
A Premium Only Plan, or POP, allows employees to make contributions to their health, dental, life and disability insurance costs before taxes are calculated. Under Section 125 of the Internal Revenue code, employees save FICA, federal income tax, and in many cases, state income tax on their health insurance deductions with every paycheck.
You can save too, because eligible businesses do not pay FICA matches or FUTA tax on employee medical deductions. For many small to medium-size companies, the savings can be impressive.
But POP paperwork is time-consuming. IRS eligibility standards are stringent and, of course, very complicated. Until recently, few smaller companies could afford to enjoy all the benefits of a POP.
Fortunately, no one is more qualified to cut through the red tape for you than Advantage. We make it easy for you and your employees to get everything that's coming to you. Our complete and affordable POP services include:
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Sample Plan Document |
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Employee enrollment forms |
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Enrollment and annual re-enrollment administration |
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Nondiscrimination and other federal eligibility testing |
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All required IRS (Form 5500) and Department of Labor filings |
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Here's how much an employee grossing $450 each week could save with a POP.
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| Gross Wages |
$450.00 |
| Taxable Wages |
$450.00 |
| FICA |
$34.43 |
| Fed. Tax (15%) |
$67.50 |
| State Tax (2%) |
$5.00 |
| Med. Insurance |
$50.00 |
| Net Pay |
$285.07 |
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| Gross Wages |
$450.00 |
| Taxable Wages |
$400.00 |
| FICA |
$30.60 |
| Fed. Tax (15%) |
$60.00 |
| State Tax (2%) |
$8.00 |
| Med. Insurance |
$50.00 |
| Net Pay |
$301.40 |
| Difference |
+$12.33 |
| Annual x 52 |
$641.16 |
Here's how much you could save on this employee if your business had a POP.
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| FICA Match |
34.42 |
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| FICA Match |
30.60 |
| Difference |
+$3.83 |
| Annual x 52 |
$199.16 |
A small business with 10 employees participating in the above scenario would realize savings of at least $1,991.60 (10 x $199.16) in FICA match alone.
Contributions to a POP plan are also exempt from FUTA, and in many states, SUTA.
For more information on an Advantage Premium Only Plan, call 1-877-777-9567 or use our convenient contact form.
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