Will
a Premium Only Plan benefit your
company?
Take the following Section 125 checkup
to find out.
Should we
participate in a Section 125 POP
Plan?
YES
NO
1.
Do you currently deduct employees’ portion
of qualified health insurance
premiums on a pre-tax basis
through a Section 125 plan?
2.
Do your employees contribute
toward the cost of the company’s
major medical insurance or
other health, dental or vision
insurance?
If
you answered “yes” to
question 1, skip to part
two of this checkup to analyze
your compliance.
If
you answered “yes” to
question 2 you and your
employees may benefit
from implementing a Sec.
125 plan. You could save
on payroll taxes and
your employees could
save on federal, state
and FICA. If you answered
“no” to question
2 your probably don’t
need a Sec. 125 plan at this
time. However, consider implementing
one if you intend to start
requiring your employees
to contribute toward their
health insurance costs.
My
company has a Section 125
plan. Should we consider
this program?
1.
Do you have a written plan
document in your files?
2.
Have you properly amended your
plan to reflect any changes
that you made to the plan year,
eligibility requirements, or
IRS regulations? (There have
been changes in IRS regulations
in 1999, 2001, 2002, and 2003)
3.
Have your employees received
a copy of the current Summary
Plan Description?
4.
Is the total of all benefits
for key employees in the plan
no more than 25% of the total
of all benefits in the plan?
5.
Do you have current signed
election forms on file for
all eligible employees?
6.
Do you require all election
changes to be made only during
the open enrollment period
unless the employee has experienced
a valid qualifying event?
7.
As your new employees become
eligible for participation
in the plan do you require
that they complete election
forms?
8.
Do you have documentation on
file to support nondiscrimination
requirements?
9.
Are the premiums for all policies
that include a “cash
value” or “return
of premium” benefit deducted
on an after-tax basis outside
the Section 125 plan?
If
you answered “no” to
any of these questions
your plan may be out of
compliance. The Internal
Revenue Code provides for
significant penalties for
failure to comply with
these requirements this
plan provides a signature
ready, customized POP plan
to ensure you will be in
compliance and continued
access to the Compliance
Support Unit.. You may
want to consult with your
tax professional regarding
your noncompliance risk.
Contact
the NHCOC office or HCI Employee
Benefits at (330) 467-0544
for more information about
your Sec. 125 kit. Companies
with 5 or more employees
may qualify for this program
at no cost.
