Understanding Section 125 Plans and How They Help You Save on Health Insurance

A Section 125 plan health insurance gets its name from part of the U.S. Tax code. At its middle, it allows workers to take a element of their wages and use it to cover fitness-related prices before taxes are taken out. Because the ones greenbacks aren’t taxed, your take-domestic pay goes further. Employers also advantage, as their payroll taxes are decrease when employees choose pre-tax deductions.

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Section 125 Plans Explained: A Win-Win for Employers and Employees

A Section 125 plan, sometimes known as a tax cafeteria plan, is a benefits program available to staff members whereby they may select from a menu of pre-tax savings. These strategies have their main benefit in that they can lower taxable income. By devoting part of their income to benefits including health insurance, dependent care, and other qualified expenses, employees who participate in a tax cafeteria plan can save on federal, state, and Social Security taxes.

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