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125 Plan With a Section 125 Plan, you can pay for fringe benefits that are otherwise not covered under your employer's health care plan. The best part is these expenses are paid for with tax-free dollars. Such plans benefit both employers, who reduce their overall payroll taxes, and employees, who reduce the taxes they pay individually, including matching FICA taxes, federal and state taxes. There are a wide variety of benefits one can receive from a Section 125 Plan, only one of which is the tax benefits. In addition to these savings, you can also receive an increase in coverage. How so? By using the tax-free dollars to purchase items that are not covered under your main health care policy. Health savings account dollars can be used to purchase over the counter medications such as allergy and cold pills, as well as to pay for dependent care, adoption costs, and childcare. Fringe Benefits of a 125 Plan A health savings account from take care that you open through your Section 125 plan does not change your health care insurance policy. It is not a modification, but an addition. Such plans are beneficial even if you currently don't use your employer's health care plan. Plus, you determine how much you wish to contribute to your account, giving you total control over your spending. One of the concerns that some people have about 125 Plans is that they reduce your tax refund at the end of the year. This may be true, but since the dollars you spend are tax-free, it is as if you are getting a refund with each paycheck. Contact us to see if a 125 Plan can help you save. |
Additional Topics Consumer-Directed Health Plans Consumer-Driven Health Accounts Dependent Care Flexible Spending Accounts Flexible Health Spending Accounts Flexible Medical Expense Accounts Health Care Flexible Spending Accounts Health Reimbursement Arrangements IRS Section 125 Cafeteria Plans Medical Expenses and Income Tax Plan for Medical that Health Insurance Doesn't Cover Save 25% to 40% on Health Expenses Save on Co-Pays and Over-the-Counter Medications Save on LASIK and Orthodontic Costs Section 125 Plan Administration |
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