Do you need a Section 125 Plan Document? Get one today!

The IRS requires employers to report QSEHRA benefits available to employees on Form W-2 . This amount must be reported on every employee's IRS Form W-2 whether or not the employee receives reimbursement from the QSEHRA; reporting will not have an effect on the employee's taxable income either way. How to report QSEHRA benefits on Form W-2 The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a fairly new HRA plan design, available to employers since December 2016. With a QSEHRA, employers with fewer than 50 full-time employees can provide funds to help employees buy individual health insurance with pre-tax dollars, as long as the employer provides no group health plan to any active employee group. Recent guidance ( Notice 2017-67 ) provides details on the basics for reporting QSEHRA benefits on Form W-2, plus how to report variances that can come up in some employee-employer situations. Standard Permitted Benefits in QSEHRA The entire amount of th

The cost of health insurance premiums paid by an employer is usually excluded from taxable income on the employee’s W-2. A more than 2% shareholder of an S corporation is not eligible for this exclusion. However, with health Insurance for S Corporation 2% shareholders, the 2% shareholder may be able to deduct the cost of the premiums on his Form 1040. What is a 2% shareholder? A “2% shareholder” is an S corporation shareholder who owns, directly or indirectly , more than 2% of the stock of the corporation on any day during the tax year . Indirect ownership – family attribution rules The following family members of a shareholder are treated as owning a shareholder’s stock for this purpose: Spouse Children Grandchildren Parents Example 1 Karen sells her entire 10% interest in Flagco (a calendar year S corporation) on January 2, 2013. She continues to work at Flagco and receives health insurance through the company. Karen is a 2% shareholder of Flagco for 2013 beca

The Plan ID is a 3-digit number used by the DOL, IRS, and ERISA to identify one employee welfare plan from another of a company’s benefit offerings. The Plan ID is used on all of our Plan Document Packages, including the ERISA Wrap Summary Plan Description.  Companies with 100+ employees will also need it for their Form 5500 filing. Every benefit plan has one Prior to gathering the information needed to order a Core 125 or other plan document package, most employers probably did not know they had or needed a Plan ID. What follows is a brief explanation of what the Plan ID is, where you find one, how to know when to retire one, and how it fits into the full plan number. Finding the Plan ID The Plan ID is a 3-digit number that designates one plan from another for the IRS and DOL. Which number goes to what plan is up to the employer in most cases. In the instructions for Form 5500 , the IRS informs us that Plan ID numbers are to begin with 501 for a company’s first health &

  Employer Health FSA contributions drive goodwill, better health security for employees, and bigger tax savings for both. Learn more about employer options in matching contribution methods. Employee contributions A Health FSA is a part of an employer's Section 125 plan that allows employees to set aside pre-tax dollars to pay for out-of-pocket medical expenses. During the employer's open enrollment period each year, every employee determines how much to set aside for the health FSA contribution by estimating eligible out-of-pocket medical expenses throughout the plan year. That amount is then divided into every pay period as a pre-tax salary reduction. Employer sets Health FSA rules Employees decide how much they need in a Health FSA, but when it comes to how FSA contributions are managed, the employer sets all the rules , including: While the IRS 2020 pre-tax maximum* for employee Health FSA contributions is $2,750, an employer may limit its employees to less than $2,750

IRS Requirement for pre-taxed employee benefits If you are an employer wanting to allow your employees to pay group health and other insurance premiums with pre-tax salary deductions, the answer is yes, you need a Section 125 plan document . In most employer-sponsored group benefit plans, employees pay for health insurance and other qualified benefits with tax-free dollars. It's just taken for granted; that's the way it's done. However, that tax-advantaged treatment is not automatic. The employer must do it through a Premium-Only Plan (POP) or Cafeteria plan, and to set up one of those, you need a Section 125 plan document. Tax savings for everyone with a plan document A Section 125 Premium Only Plan document allows your employees to voluntarily agree to a "salary reduction" so that the employer can pay their insurance premium as a business expense. The portion of the insurance premium the employee is responsible for is deducted right off the top of income before