HSA Savings Can Be Pre-Taxed Through a Section 125 Premium Only Plan
When employees have their HSA or Health Savings Account bank deductions made through a Section 125 Premium Only Plan (POP) they save an additional 7.65% in Medicare and Social Security payroll taxes. Employers also save their matching 7.65% FICA (Medicare and Social Security) tax.
Bradenton, FL (PRWEB) November 24, 2006 -- Core Documents, Inc., a national leader in providing Section 125 and HRA Plan Documents, reports that every employer offering an HSA qualifying health insurance plan to their employees should amend their Section 125 Premium Only Plan document to include HSA savings. The New Year is historically when most employers renew or start a new Section 125 plan year. So now is the time to consider updating your Plan Document to include the new HSA Savings Module.
Everyone knows the HSA insurance premium can be pre-taxed, however many employers are unaware the HSA bank savings portion can also be pre-taxed through a Section 125 Plan. However HSA savings can not be diverted through the Section 125 plan until the employer's plan document has been amended to include the proper provisions to govern the new benefit.
Why process HSA savings through the Section 125 Plan? Because the employer saves their matching 7.65% FICA Medicare and Social Security taxes and the employee also reduces their required 7.65% Medicare and Social Security tax. Everyone reduces their payroll taxes.
If the employee waits until the end of the year to write-off HSA deductions on their 1040 income tax form they'll be limited to an income tax write-off only. They do not get to write-off their 7.65% Social Security and Medicare taxes. Neither does the employer reduce their matching FICA taxes when the employee waits to write-off the HSA deduction at year end.
Another employer benefit of allowing HSA savings to be run through the Section 125 Plan is the ability to avoid the restrictive "HSA comparable contributions rule."
In a recent interview with Gene Ennis CFC, the President of Core Documents, Inc., he said we offer employers everything they need to establish a Section 125 Plan with an HSA Module for only $179 plus $15 shipping and handling. This plan document package equips the employer with everything they need to be legal and compliant with the IRS and Department of Labor requirements. See more information at: www.CoreHSA.com
# # #
|
