BASE^® Premium Only Plan

The BASE^® Premium Only Plan (POP) allows for an IRS-approved change in an employer’s payroll process to deduct the employee portion of employer-sponsored benefit premiums on a pre-tax basis. Once this type of plan is in place it gives employees a means of paying for their share of employer-sponsored premiums on a pre-tax basis, which allows an employer to cut payroll taxes and increase an employees’ take-home pay.

Benefit to Employer:

Financial Benefits.
The employer saves on the amount of matching FICA tax the employee has withheld from their paychecks on a pre-tax basis. If only a few employees choose to take advantage of the ability to pay health insurance premiums with pre-tax dollars, the employer can still realize a net financial gain.

Easy and Inexpensive Set Up.
Employers are able to add value and savings to their benefit package with one quick payroll adjustment. The POP is an effective way for business owners to allow employees to pay for employer sponsored group health care by utilizing pre-tax dollars. As a result, this creates a more competitive benefit package, while generating tax savings for the employer.

Benefit to Employee:

Increased Take-Home Pay.
Participating employees benefit from the ability to pay their share of employer-sponsored benefit premiums, including health, dental, and vision, with pre-tax dollars through salary reduction. This saves employees Federal, State and FICA taxes.

Affordable Health Care.
Depending on an employee’s family income, the amount of money that individuals can save by paying for health insurance this way is 25% to 50% of their total insurance premium. Ultimately this benefit provides a tax savings, while also helping to defray the cost of insurance premiums.

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125 Cafeteria Plan Tax Savings Calculator

Partial List of Deductible Medical Expenses

Enter the total Monthly amount for the expenses listed below. When you're finished press the Total button.

Acupuncture

$

Alcoholic/Drug Treatment

$

Birth Control Pills

$

Chiropractic

$

Co-payments

$

Counseling (for a medical condition)

$

Deductibles

$

Dental Fees

$

Diabetic Supplies

$

Diagnostic Fees

$

Dr. Fees

$

Hospital Bills (emergency room fees)

$

Over-the-Counter Medications

$

Laboratory Fees

$

Medical Equipment

$

Medical Mileage

$

Medical Tests

$

Prescription Medication

$

Obstetrical

$

Operations/Surgery

$

Office Calls

$

Orthodontia/Braces

$

Physical Therapy

$

Physical Exam (routine)

$

Radiology/X-rays

$

Vaccines/Allergy/Flu Shots

$

Vision (contacts/supplies, eyeglasses, Lasik surgery)

$

Other

$

Total

Tax Savings Calculator

The BASE^® 125 Cafeteria Plan provides a variety of options that are great for enhancing benefit packages, while allowing them to cut payroll taxes by decreasing the total taxable payroll. Employees will save 25% to 40% in taxes for every dollar they elect, while employers save on every dollar employees set aside from their paychecks to budget for their 125 plan.

With this calculator you will get an estimate of employee savings that can be gained utilizing the BASE^® 125 Cafeteria Plan. The tax calculator provides an indicator for the potential savings that can be realized, whether any combination of the Dependent Care Assistance Plan, Flexible Spending Account, or Premium Only Plan options are utilized.

125 Cafeteria Plan Tax Savings Calculator

Enter amounts for one employee participant:

Annual Gross Pay:

$

Monthly Health Insurance Premiums:

$

Monthly Medical Expenses:
Calculate your Monthly Medical Expenses

$

Monthly Dependent Care Expenses:

$

Federal Tax Rate:

10% 12% 22% 24% 32% 35% 37%

State Tax Rate:

5% 0%

FICA Tax Rate:

7.65%

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Frequently Asked Questions

Why would an employer want to do a Premium Only Plan?

The employer deducts the employee’s share of insurance premiums from the employee’s paycheck before calculating applicable taxes. Therefore, paying premiums through a Premium Only Plan results in lower taxes and more take home pay for employees and FICA tax savings for employers.

What size of employer can use this type of plan?

Any size employer can take advantage of a Premium Only Plan.

Must all employees participate?

Employees who are currently contributing toward their health insurance benefit would participate, unless they opt out of the Plan.

What types of benefits can be offered under the BASE^® Premium Only Plan?

This type of plan allows for employees to pay for a variety of employer-sponsored benefits, such as health, dental, vision, ultimately reducing taxable compensation. When premiums for short term and long term disability are paid through a Premium Only Plan, the employee is taxed on the disability payments when they are received. Therefore, in most instances it is not advantageous for employees to pay short or long term disability premiums through the POP.

Do you have additional questions about the BASE^® Premium Only Plans?

Contact Us

Send us your questions or comments by filling out this form and a BASE^® representative will call within one business day, or call (888) 386-9680 to speak with a support specialist during our office hours.

Business Office Hours

• Monday - Thursday
  8am to 4:30pm CST
• Friday
  8am to 12pm CST

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