Construction contractors, be they relatively small and independent or massive and heavily employed organizations taking on titanic projects, face a great many logistical challenges before they take to the field. Coordinating and planning risk management with subcontractors, providing design teams with budget and schedule updates, and haggling over deadlines with site owners provide the backdrop to most contracted projects. Added to the bustle of client interactions is the barrage of State and Federal legislative requirements. Construction contractors nationwide play a delicate game, balancing financial obligations between employee compensation, liability insurance, worker's comp, and, in some cases, pollution and environmental insurance. All considered, construction contractors sponsoring health insurance for their employees in the face of the many and varying obligations they manage deserve some help where their finances are concerned. Section 125 Premium Only Plans or POP can ease the burdens of health insurance premiums and promote the success of subscribing to construction contractors.
The financial tolls Premium Only Plans help to offset have weighed heavily on the financial stability of many construction contractors over the last several years. According to the Oregon Healthcare Reform Information Organization, contractors nationwide have reported an average 160% increase to the price of insurance premiums. Sadly, the rise in prices has not occurred without consequence. The dramatic rise in premium cost has, according to the coverage organization, forced construction contractors to:
Lower the wages they pay their employees (bali construction)
Change the scope of their business to non-construction activities, thereby eliminating the cost of liability insurance
Go out of business altogether
Construction contractors can use POP's to avoid compromising their businesses and save swaths of capital in annual FICA taxes. Premium Only Plans allow their employees can contribute to their health care premiums before taxes are deducted from their pay, and the tax free nature of the contributions can save contractors up to 7.65 percent in annual taxes. The savings can equate to several hundred dollars per year.
Premium only plans not only drive the cost of sponsoring health insurance plans down for contractors, rendering them increasingly manageable as tax-savings are realized, they also dramatically decrease the impact employee contributions have on employee finances. Because employee contributions are deducted pre-tax, employee take home pay is increased on a month to month basis. These savings can be applied to a range of health plan benefits, so employees can afford to subscribe to a more diverse range of personal and dependent benefits.
Any of the costs associated with initially setting up a premium only plan are usually returned over the course of the first year by the savings accrued.
Employers interested in subscribing to a POP or learning more about them should visit Taxfreepremiums at their home page. Taxfreepremiums handles all of the paper work POP requires, automatically updates throughout the year to ensure compliance, and provides free nondiscrimination testing with every POP purchase.
Willhelm Bailey has authored dozens of articles on Health Care and is an expert on the financial nuances surrounding Section 125 Premium Only Plans