Pre-tax Payment of Insurance Premiums and HSA Contributions Most employers permit their employees to pay their group insurance premium contributions on a pre-tax basis. They do so through a Premium Only Plan as permitted by Section 125 of the Internal Revenue Code (125 Plan). In order to permit pre-tax contributions to be made to a health insurance plan or a Health Savings Account (HSA), the Section 125 Plan must be implemented. If one is already in place, the current plan probably needs to be re-stated to include HSA language.

It's easy to start! It's easy to maintain! It's easy to terminate when you no longer need it!

In order to have a valid 125 Plan, the IRS says you must have:

• a written plan document; and
• a Summary Plan Description (SPD); and
• an enrollment form signed and dated before an employee's first pre-tax payroll deduction.

The Benefit of a 125 Plan

• 25% Income Tax Savings for Employees: Employees don't pay Federal, State, Local, or Social Security taxes. **You should check with your accountant for state and local taxes other than Ohio.
• 8% Payroll Tax Savings for Employers: You, the employer, do not have to match Social Security taxes nor do you pay Worker's Compensation premiums (in Ohio) on employee contributions.

Getting Started is Easy with an initial one time set up fee of $300