The Flexible Benefits Program is a fringe benefit plan specifically authorized by Section 125 of the Internal Revenue Code. It is a way of providing employees with valuable benefits where both the organization and its employees can reduce their tax liability.

The simplest and most easily communicated plan includes only the premium conversion benefits. Such simple plans do not involve a great deal of expense and can be implemented in even the smallest companies with contributory group insurance plans. They can improve employee morale because the organization is providing the opportunity for employees to achieve a tax savings on their share of premiums otherwise paid with tax reduced salary. No changes need to be made to your existing insurance benefits to take advantage of the Flexible Benefits Program premium conversion option. The premium payments made by employees are still handled through your payroll department – they are just converted to pre-tax reductions, rather than after-tax deductions.

Premium conversion plans can become particularly useful when, due to rising health insurance costs, your organization finds it necessary to increase employee’s premium contributions. With pre-tax dollars, the increase is moderated.

For more information, please click here.

Always consult with your tax or legal advisor with any questions about tax or legal matters. You may also visit the IRS website at www.irs.gov for further information.