Why aren all medical insurance payments pre-tax?
Some smaller employers don’t establish pre-tax medical insurance deduction programs, thinking they are too expensive for the company. In fact, most payroll services offer relatively inexpensive premium-only plans (POPs), which allows employees to pay their medical premiums before taxes are deducted from their paychecks. The costs are a bit higher for flexible spending accounts (FSAs) that allow employees to set aside part of their wages to cover out-of-pocket medical expenses. Giving this benefit to employees is like giving them a raise without taking money out of the employer’s pocket. Let’s face it, when the medical premiums for a family run $3,000 to $10,000 per year or more, the tax savings to an employee can be as much as $800 to $3,500 per year. (Take into account federal and state income taxes, FICA and Medicare taxes, which are not paid on these dollars. True! Unlike retirement contributions, flexible spending dollars come off the top, before FICA/Medicare.) The employer benefi
