What is a Premium Reimbursement Account?
Premium Reimbursement Accounts are accounts that allow you to take a pre-tax deduction from your paycheck for privately purchased insurance.
Important Facts to know about a PRA
- These insurance plans cannot be part of a group plan.
- Premium reimbursement Accounts are typically used for health, dental and vision plans.
- The cost of your premium can be paid with pre tax dollars.
- An election must be made at the beginning of your plan year.
- You cannot change your election during the year unless you have a qualifying event.
- If you do not make a new election each year; your current election will automatically rollover each plan year.
- Each pay period you will have pre tax payroll deductions taken from your paycheck.
- You will need to submit a claim form with your invoice monthly to HRC to be reimbursed for your premiums with your pretax dollars that were withheld from your paycheck.
- You are responsible for paying your provider with the reimbursement.
Why Would A Company Consider a PRA?
Premium Offset Plan is a provision under the Internal Revenue Code Section 125 that enables employers to allow their employees to have certain premiums that they have to pay out of their paycheck, to be taken out before the employee pays tax. These premiums would be taken out before the Federal tax, FICA tax, and the State tax. The POP also allows the employers to save on the matching FICA that they would have had to contribute on this amount.
What Premiums Qualify?
Employee Group Term Life (up to $50,000)