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Premium Conversion

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What is it?

Premium Conversion is a tax-savings benefit under Sec. 125 of the Internal Revenue Code. It enables employees to save both FICA (7.65%) and Federal Income Tax (15-35%) on their portion of insurance premiums that are deducted from their paychecks. Paying for insurance premiums with pre-tax dollars can significantly increase the take home pay for employees.

Participant Tax Savings Illustration

Premium Conversion allows the following insurance premiums to be deducted pre-tax:

  • Medical
  • Dental
  • Vision
  • Disability
  • Accident & Cancer policies
  • Group term life insurance policies with a face value of $50,000 or less.

premium conversion

 

 

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