There is, it is sad to say, an increasingly prominent issue regarding employer sponsored health insurance that is matched in its severity as a national problem only by the consistency with which it is overlooked. The 113% rise in healthcare premiums over the last ten years, the increasing legislative mandates on healthcare providers and employers sponsoring benefits, and the ever rising percentage of employed individuals unable to access or afford coverage has evolved into a self-propagating cyclone of economic crisis. As knee-jerk legislative policies heap policy requirements on insurance providers and providers raise premiums in response, employers will have to turn to IRS provided strategies like the section 125 premium only plan in order to manage the costs associated with providing sponsored benefits.

The Consumers Union, a nonprofit organization devoted to thorough and accurate surveys of market related consistencies and developments, conducted a survey on several healthcare providers whose results revealed one of the major symptoms of our self-propagating issue. As the ACHA’s effect on healthcare prices are still, for the most part, unknown, health insurance providers nationwide have been stockpiling massive amounts of surplus revenue while continuing to raise the cost of healthcare premiums.

It should be understood that insurers maintaining a foundation of surplus capital is not only common, but almost universally required. State legislation procures mandatory minimum surplus amounts insurers are required to maintain in order to ensure they can continue to cover client expenses in the event of a major emergency. The issue, according to the Consumers Union, is that many insurance providers are maintaining a surplus capital that far out stands their minimum requirements; capital that could very well be used otherwise to lower the cost of national insurance premiums.

However difficult as it is bear their justifications legitimate attention (as our ability to access affordable healthcare dwindles in contrast to their growing surplus funds), some insurance providers have good cause for their massive surplus. The Affordable Health Care Act has and will continue to have major effects on the United States economy. Those effects will directly impact the price of healthcare, which correlates into a shift in the pressures placed on healthcare providers. Without a strong foundation of surplus funds, insurance providers might very well find themselves unable to cover the costs of medical bills and inevitably out of business.

On the employer end, the IRS section 125 premium only plan is one of the tools available for managing the effect this circulating issue has on their finances. As insurance providers maintain their surplus funds and premium prices rocket, employers can use POP plans to negate the rising costs by allowing their employees to apply their premium contributions with tax-free dollars. While using a premium only plan, employers can deduct employee premium contributions before regular state and Federal taxes are withdrawn. This process dramatically increases employee take-home pay ($100-$300) per month and can reduce the price of sponsored health care by up to 40%; employees can better afford their health insurance and employers, free from matching the FICA taxes otherwise applied to employee contributions, save 7.65% annually.

Employers interested in compensating for the rising premium prices through the premium only plan strategy should consider Taxfreepremiums as they work through the process of subscription. Taxfreepremiums provides optimum POP plan services, handling initial filing, automatic compliance updates, and providing free nondiscrimination testing software with every plan purchase. For more information, feel free to visit

Source by Willhelm Bailey

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