Section 125 Plans

Section 125 of the Internal Revenue Code, enacted by Congress in 1978, allows companies to give their employees the opportunity to pay for benefits on a pretax basis. As deductibles and out-of-pocket expenses increase, pre-tax reimbursement accounts can save employers and employees money.

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Premium Only Plans (POP)

This alternative is the most basic use of Section 125. Employees can pay for qualified health benefit premiums on a pretax basis, thus lowering their taxable income and tax liability.

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Flexible Spending Accounts (FSA)

Spending Accounts are a means for employees to pay for certain out-of-pocket health care or dependent care costs on a pretax basis. Payroll deductions are taken at the employee's discretion and put aside into a FSA to pay for future qualified medical expenses.

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Health Savings Accounts (HSA)

Another means for paying for out-of-pocket medical costs with pretax dollars. Contributions may be made by the employee with pretax dollars or by the employer.

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Health Reimbursement Accounts (HRA)

An alternative to the Health Savings Account which uses employer money to offset the employee's out of pocket costs associated with a High Deductible health Plan. Employers commit to paying for a pre-established maximum amount of money per employee for costs of deductibles, coinsurance, and other out of pocket costs.

Cafeteria Plans

This alternative gives employees the opportunity to gain control over their benefit expenditures through a "cafeteria" or menu-like plan.

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Group Benefits
That Ultimately Pay Dividends

It ultimately pays dividends in the long run by: