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 for health insurance premiums or health savings account (HSA) contributions, a 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! 

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

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.
For this one time set up fee, FlexBank, Inc. will provide you with a prototype written plan document, summary plan description (SPD) and enrollment form.

Step 1. Complete our POP document preparation application; and
Step 2. Make your check payable to FlexBank, Inc. for $300.00; and
Step 3. Mail it to:

FlexBank, Inc.,
Attention FlexBank Compliance
1250 W. Dorothy Lane, Suite 107
Dayton, Ohio 45409

Download Application