Section 125 Question

[Guest]

Thanks for the post, LGilmore!

What is the product you're trying to replace? Life? why on earth would anyone pretax premiums for life, makes no sense. Takes away a primary benefit of LI.

Is it DI?

one thing you do mention your new at this. Take an after noon and read as much as you can on the subject.

Not new at selling life and voluntary health products (individually), but new at running into the 125 road block when they have a policy and they want to replace it with me as an individual policy (cancer, accident, critical illness, stuff they usually have with the duck at work). I'll read up on it and be prepared to recognize what they can and can't do. Again, for me it is just a side sale, when I run into it during a regular life sale.

 

[LGilmore]

they can drop the duck at any time. The irs will not penalize them for not wanting to pay premiums anymore. That's a bs line from the duck people. Premium only does not work that way as it only provides a tax discount for payroll deducted premiums. The premiums can stop at any time, cancel, non payment, laspe.. etc.. The IRS does not undie bunch if an employee decides to drop a policy.

Now it is up to the HR if they want to add you to the mix. Have you met that person yet? If the EE doesn't care about the deduction and doesn't care about payroll withdrawls, I don't see a problem. They just need to tell HR they have a personal "hardship" and must stop the payroll plan. What someone buys on their own time from their own home is not anyone's business.

If you have a better product and can see the owner, try to take over the account. The IRS only cares that the numbers are correct, not what carrier provides the service. The duck people provide the plan as a free service, but basically it's a do it yourself type plan.

 

[Guest]

Very good information, thank you very much!

 

[NewHealthStrategies]

The reason you hear this is because some yahoo screaming Mimi HR person heard what they THOUGHT was this rule and it became whisper-down-the-lane.

The logic behind it was so that employees did not take advantage of a tax favored environment.... for example, buy into the plan for 2 months, use all the benefits and then roll out of the plan, the buy back in later....... so the rules were created to provide relieve from taxes, but restrict the in/out provisions that the insurance industry hated so much..... hmmmm.... politics had a lot to do with it.... go figure.

Has anyone ever seen those goats you can scare and they fall over?