| The
IRS allows large employers with a properly structured and properly documented
Section 125C Plan (like Abel) to place all the premiums that employees
pay for health insurance PRE-TAX.
The example
below shows how much an employee can keep of his/her own money using this
plan. |
| Example: $1,000
of income and $100 of health insurance. |
WITHOUT
Section 125
$1,000 Gross Income(all
taxable)
- 250 Taxes
(assuming 25% for all taxes:
FICA, Federal, State, local taxes, etc.)
$ 750
- 100 for
Health benefit premium
$ 650 Take home pay
|
WITH
Section 125
$1,000 Payroll
- 100 for Health
benefit premium
$ 900 Gross Income (taxable
amount using Sec. 125)
- 225 Taxes
(assuming 25% for all taxes: FICA, Federal, State, local taxes, etc.)
$ 675 Take home pay
|
| NOTE:
In this simple example, 25% of the healthcare premium was saved from
the IRS and put back into the pocket of the employee. If the employee spends
$100 a month for his or her healthcare, then this person will be able to
save $25 using pre-tax wages instead of after tax wages. |
