Section 125

Example:

John's Status

Married Three fed./state exemptions Weekly Salary: $500 Major Medical through payrool deduction/$20 John has three children. His weekly salary is $500. He currently pays $20 per week to cover his family under a major medical plan.		With a premium only plan, John can pay his major medical premium before taxes are taken out. Take a look below for a comparison of his paycheck with and without a premium only plan. John reduced his pretax income by paying his premiums before before taxes were deducted from his paycheck. Because John's taxable income is less, his taxes are lower-$70.19 instead of $74.98. Each week, John's spendable income increases by $4.79. By the end of the plan year, John's spendable income increased by $249.08.
	Without Premium Only Plan		With Premium Only Plan
Gross Pay	$500.00		$500.00
Pretax reduction (major medical ins.)	-0-		$-20.00
Taxable gross	$500.00		$480.00
FICA, Fed. & State taxes	$-74.98		$-70.19
Net pay	$425.02		$409.81
Payroll Deductions (major medical ins.)	-$20.00		-0-
Spendable income	$405.02		$409.81