Calculate Effect of POP on Employee Net Cost

[yorkriver1]

Just found this handy calculator for employee savings estimate: Premium Only Plan (POP) | Tax Calculator | BASE®

I also need to mention the savings on payroll taxes to the ER. That I need more homework on. LLC, employer/owner pays self and employees on payroll.

 

[Botboy141]

6.2% Social Security, 1.45% Medicare, unemployment (FUTA/SUTA) caps at various levels depending on the state so not as relevant. Total premium times 7.65% = employer tax savings.

 

[rcduggan]

Just found this handy calculator for employee savings estimate: Premium Only Plan (POP) | Tax Calculator | BASE®

I also need to mention the savings on payroll taxes to the ER. That I need more homework on. LLC, employer/owner pays self and employees on payroll.

idea is there but i am curious how an employee deducts medical expenses without an HDHP? are you assuming this is in place or just throwing out there that anyone can deduct said expenses?

 

[LostDollar]

idea is there but i am curious how an employee deducts medical expenses without an HDHP? are you assuming this is in place or just throwing out there that anyone can deduct said expenses?

The implications I take from the descriptions on the link is that it relates to cafeteria plan items as well and the tax savings is talking about tax effects the employee gets by reducing their taxable income.

 

[yorkriver1]

The implications I take from the descriptions on the link is that it relates to cafeteria plan items as well and the tax savings is talking about tax effects the employee gets by reducing their taxable income.

POP= Premium Only Plan, set up under Section 125 rules for employer based benefit plans

This question was intended for someone who is regularly working on and familiar with plans that operate under Section 125 IRS code, which includes what are called Cafeteria plans, and includes the option for employers to set up a payroll deduction for employee paid premiums so they are "pre-tax", therefore reducing the taxes paid by both employer and employee. The employee's income is reduced by the amount of the insurance premium deduction from their paycheck. The employer avoids paying payroll tax on that amount.

Other options under Section 125 include the Flexible Spending Account. Google has some pretty good simple explanations.

 

[LostDollar]

POP= Premium Only Plan, set up under Section 125 rules for employer based benefit plans

This question was intended for someone who is regularly working on and familiar with plans that operate under Section 125 IRS code, which includes what are called Cafeteria plans, and includes the option for employers to set up a payroll deduction for employee paid premiums so they are "pre-tax", therefore reducing the taxes paid by both employer and employee. The employee's income is reduced by the amount of the insurance premium deduction from their paycheck. The employer avoids paying payroll tax on that amount.

Other options under Section 125 include the Flexible Spending Account. Google has some pretty good simple explanations.

I made the response I did because the poster whom I quoted seemed to be responding to you with the idea that there was only one type of plan involved in your lookup suggestion and when I looked at your referenced site, I saw the additional items like flexible spending, dependent care and references to cafeteria health plans which you just mentioned above.

The poster whom I quoted also seemed to me to be implying that you were suggesting the employee would be taking a deduction for these expenses on their own return. If true, that idea totally misses the point, which you also mentioned immediately above, that the "deduction" happens in the employers records and on the employee's W2 before the employee does any tax computations of their own.

Some insurance agencies find it beneficial to provide links to tools of a similar nature to employers too, so HR can encourage employees to do their own individual computations about the tax effects of various deduction levels they might be considering.

 

[yorkriver1]

I made the response I did because the poster whom I quoted seemed to be responding to you with the idea that there was only one type of plan involved in your lookup suggestion and when I looked at your referenced site, I saw the additional items like flexible spending, dependent care and references to cafeteria health plans which you just mentioned above.

The poster whom I quoted also seemed to me to be implying that you were suggesting the employee would be taking a deduction for these expenses on their own return. If true, that idea totally misses the point, which you also mentioned immediately above, that the "deduction" happens in the employers records and on the employee's W2 before the employee does any tax computations of their own.

Some insurance agencies find it beneficial to provide links to tools of a similar nature to employers too, so HR can encourage employees to do their own individual computations about the tax effects of various deduction levels they might be considering.

Thanks, good information. Each employee has a unique tax situation, so doing their own homework makes sense. I am finding that tax professionals are not always up to speed on employee or individual benefits tax rules. Recent example, a business tax service in our state's capital city that had never heard of HSA's.

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