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A pre-tax medical premium is a health insurance premium your employer deducts from your paycheck before any income taxes or payroll taxes are withheld and then pays to the insurance company on your behalf. You must be enrolled in your employer-sponsored health insurance plan to pay your premium with pre-tax money.
For instance, a section 125 plan or cafeteria plan allows employees to pay qualified medical, dental, vision, or dependent care expenses on a pre-tax basis, which can reduce their taxable income as well as their employers Social Security (FICA) liability, federal income, and unemployment taxes (FUTA), and state
The 125 Cafeteria Plans allow for employees to withhold a portion of their salary on a pre-tax basis to pay for their qualified expenses. The 4 options are the Premium Only Plan (POP), Flexible Spending Account (FSA), Limited Purpose FSA (LPFSA), and Dependent Care Assistance Plan (DCAP).
Contributions to cafeteria plans are withheld on a pretax basis, thereby lowering taxable income, which means employees pay less in federal income tax and Medicare and Social Security taxes.
Thus, sole proprietors, partners in a partnership and 2% or greater shareholders in an S-corporation are ineligible to participate in a cafeteria plan. In addition, the plan may not be established primarily for the benefit of former employees.
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People also ask

Contributions to a cafeteria plan are made pre-tax, lowering your total taxable income and reducing income, Medicare, and Social security taxes. Popular options include insurance benefits, retirement plans, and benefits that help with life events such as adoption.
Many people wonder if they can deduct health insurance premiums, which is the cost of insurance paid from your paycheck, or just out-of-pocket medical costs. Medical insurance premiums are deducted from your pre-tax pay. If youre wondering if health insurance premiums can be deducted, the answer is no.
A Section 125 plan typically lets employees use pretax money to pay for health insurance premiums for medical, dental, and vision. Other options include retirement deposits, supplemental life or disability insurance, Health Savings Accounts, and various medical or dependent care expenses.