A surprisingly low number of businesses know about, much less utilize, IRS section 125 premium only plans (POP plans) and the immense tax savings they grant. With localized poles indicating that up to 90% plus business owners have never heard of POP plans and national poles approximating less than 15% of employers subscribing to them, a fairly substantial number of businesses are missing out on the savings POP plans offer. They are curious and daunting statistics; with four states requiring varying forms of compliance, and a dozen other states offering promotional and legislatively mandated benefits to employers subscribing to POP plans, employers failing to subscribe risk breaching State requirements as well as missing out on tax-savings ranging in the hundreds of dollars.
Most states began seriously considering the implementation of formally mandated section 125 premium only plans around 2005 in preparation for the requirements and goals of the Affordable Health Care Act. Though legislative requirements were controversial, between 2007 and 2008 four States enacted policies requiring businesses meeting certain criteria to comply to a POP plan and several others began offering benefits and incentives for compliance.
A pattern has emerged among State legislation, and will in all likelihood continue to manifest itself in the form of POP plan friendly policies. The Cover Florida Health Care Plan requires businesses participating in the reform program to comply with IRS section 125 cafeteria plans (A category encompassing premium only plans). Indiana offers a tax credit to employers of up to $2,500 who choose to subscribe to POP plans. The State of Massachusetts has gone so far as to require any business with more than 11 employees to subscribe to premium only plans under penalty of State fines. Between the fierce health care reforms taking place at the federal level and the marked success of premium only plans and their ability to render employer sponsored health insurance accessible and affordable it is estimated that within the next ten years every state will legislatively require most businesses to remain in compliance with premium only plans. For information on current state promotions and requirements, feel free to visit http://www.ncsl.org/?tabid=14515#.TkHNqNC-HnA.
Happily, employers have nothing to lose and everything to gain. Employees contributing to health care premiums in compliance with POP plans contribute to their group health insurance plans before taxes are deducted. Employee take home pay is dramatically increased at no extra cost to sponsoring employers. As a result, employees can afford a wider range of benefits, and retention increases. Premium only plans, aside from the legislative benefits many States offer, also reward subscribing businesses a 7.65% reduction in annual social security and Medicare taxes because of the tax free nature of employee contributions.
Average Cost of Health Insurance Will More Tennessee Health Insurance Access Lead To Delayed Treatment? Small Business Challenge: What Does Health Care Reform Require? What Are The HIPAA Regulations For Patients HIPAA Certificate Of Creditable Coverage
0 comments:
Post a Comment