Section 125 Insurance

The professionals at paychex make section 125 plans even more appealing by handling much of the frustrating work required to start and manage them so you can relax and enjoy the benefits.

Section 125 insurance. With pre tax benefits you deduct the employee s contribution before you withhold taxes reducing their taxable income. Section 125 is officially an irs pretax vehicle nicknamed cafeteria plan because employees can choose pretax benefits like medical or dental insurance or opt to receive the equivalent amount on their paycheck paying taxes on it. Section 125 saves your employer money too as the company does not have to contribute the matching social security medicare and unemployment taxes on the dollars you put in the plan.

Employees enrolled in a section 125 plan can set aside insurance premiums and other funds pretax which can then be used on certain qualified medical and child care expenses. Section 125 is a written plan that lets employees choose between qualifying benefits and cash. Employees their spouses and dependents can all benefit from section 125 plans.

The section 125 cafeteria plan authorized taking pre tax dollars from the employees gross income for the named purposes in section 125 that include health insurance.