Employer Payroll Tax Savings Using Section 125 with HSA Plans
Lake Geneva, WI-February 02, 2005- With more and more employers opting for High Deductible Health Plans (HDHP) and offering their employees Heath Savings Accounts (HSA), the question comes up about whether the HSA portion (savings component) qualifies as a pretax payroll deduction through the Section 125 Premium Only Plan.
(PRWEB) February 2, 2005
hsa Trustee Services a nationwide provider specializing in opening Health Savings Accounts/HSA, working with Core Documents, Inc., a nationwide leader in providing compliant plan documents for Section 125 Premium Only Plans (POP), Flexible Spending Account Plans (FSA), Section 132(f) Commuter Plans, and Health Reimbursement Arrangement (HRA), have developed a HSA module for the Section 125 Premium Only Plan that allows the HSA savings component to be pre-taxed.
Setting up a Section 125 POP with the HSA module allows business owners to save matching Social Security (FICA), as well as federal unemployment taxes (FUTA) and generally, state unemployment taxes, on the money employees contribute to their premiums as well as the HSA savings component. Employer tax savings can average 7 to 10 percent. In California and several other states the Section 125 payroll deductions reduce the threshold on which workers compensation premiums are levied for even more savings to the employer. For example, if an employee pre-taxes $5,150 into the HSA savings account, the employer will save approximately $500 in matching FICA & FUTA taxes. (These numbers are examples. A tax advisor should be consulted for information on individual state regulations.)
Employees realize savings in their FICA, federal, and, in most cases state income taxes. This is roughly a 30% tax savings. An employee who pre-taxes his HSA savings component through the POP, funds his account tax free or pretax instead of funding it with after tax dollars outside the group and then writing it off his taxes at the end of the year. It's a "save-as-you-go" pretax HSA payment plan. An employee who saves the HSA maximum $5,150 through the Section 125 POP reduces his or her payroll taxes by approximately $1,545. (Depending on the employee's tax bracket the savings could be more or less).
For more information on how your company can take advantage of this Section 125 with the HSA module contact Tim Morales, hsa Trustee Services 866-hsa-2010, www. hsaTrusteeServices. com or Gene Ennis at Core Documents, Inc. 888-755-3373, www. CoreDocuments. com.
About Core Documents, Inc.:
Core Documents, Inc. has assisted thousands of employers and tens of thousands of employees since 1997 reduce their income tax and FICA tax liability through the use of IRS compliant plan documents including: Section 125 Premium Only Plans (POP); Cafeteria Plans; Dependent Care Assistance Plans; Medical Expense Reimbursement Flexible Spending Accounts (FSA); Section 132(f) Transportation Fringe Benefit Plans; and the new Health Reimbursement Arrangement Plans (HRA). For more information contact Gene Ennis, Core Documents, Inc. 888-755-3373, www. CoreDocuments. com
About hsa Trustee Services:
Hsa Trustee Services is an nationwide provider specializing in opening Health Savings Accounts (HSA) for individuals, families and groups since the inception of the HSA program in January 2004. hsa Trustee Services was the first TPA to offer "no monthly fee" HSAs which includes a free prescription discount drug card. hsa Trustee Services works with banks and credit unions nationwide, setting up their HSA program so more Americans can take advantage of HSA plans. If you would like more information on this program, or the other benefits of using hsa Trustee Services, please call 866-hsa-2010. hsa Trustee Services, dedicated to “Keeping the $avings in the Health Savings Account”.
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