Section 125

Premium Only Plan (POP)
With Section 125, employers have the power to cut payroll taxes without cutting their payroll. As a result, controlling and maintaining benefits costs can be substantially improved.  A Premium Only Plan sometimes called POP plans reduces income tax liabilities for both the employer and employee. IRS Section 125 allows employees to make special salary deduction elections to pay their portion of medical insurance premiums using pretax or tax-free dollars. AxisPointe provides software for this service at no cost to you. 

Some of the eligible programs include:

Health Benefits Dental Benefits Disability Benefits Vision Benefits

Flexible Spending Accounts (FSA)
FSA are cafeteria based plans commonly used by many employers.  Employees participating in this plan can elect to have a monthly salary reduction to pay for their benefits on a pre-tax basis.  The employer then uses these funds to pay for certain benefits with pretax dollars.

There are two types of FSA’s:

• Health Benefits not otherwise covered.
• Dependent care expenses for both Children & Parents.

Tax Benefits:
The payment of the benefit is tax deductible for the employer and is not considered additional income to the employee.  As these dollars are not considered to be wages, they are not subject to either FICA or FUTA tax.

Use It Or Lose It:
Any unused funds remaining in an FSA at the end of the year will be forfeited by the employee.  At the beginning of the year, a careful estimate of future expenses is helpful in avoiding the “use it or lose it” problem.  However, employers may (but are not required to) establish a grace period of 2½ months after the end of a plan year.  During this grace period, any unused funds may be paid or reimbursed to the employee for qualified expenses incurred during the grace period.