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Set up a Section 125 Health Insurance (cafeteria) plan

There are two methods you can use to set up a Section 125 Health Insurance (cafeteria) plan. The EZ Setup method lets QuickBooks do most of the work, while Custom Setup allows you to make specific selections during the set up process.

Detailed instructions

EZ Setup:

  1. From the QuickBooks Lists menu, choose Payroll Item List.
  2. Click the Payroll Item button at the bottom of the window, and choose New.
  3. Select EZ Setup, and click Next.
  4. Select each item you want to set up, click Create > Continue. There are four pages with item choices. If there is a page that does not contain items you want, just click Continue. The 125 - Health Insurance (pre-tax) option is on the second page.
  5. Click Finish. The item will now appear in your Payroll Item list.
  6. Add the item to each qualified employee record.
    • From the Lists menu, choose Employee List. Double-click an employee name to open an Edit Employee window. Click the How Do I? button for additional information.

 

Custom Setup:

  1. From the QuickBooks Lists menu, choose Payroll Item List.
  2. Click the Payroll Item button at the bottom of the window, and choose New.
  3. Select Custom Setup > Next.
  4. Select Deduction > Next.
  5. Enter a name for your payroll item (for example, 125 Health Insurance Plan), and click Next.
  6. Enter the name of the plan company or agency, and enter an identifying number (for example, a plan or account number).
  7. Select the liability account where you want to track the deduction until payments are made. Click Next.

    Note: If the company pays all of the insurance, it will write a check using a specific expense account. When you set up the deduction for the employees, instead of using a liability account on the payroll item, choose the same expense account as used on the check. This reduces the company expense and makes it so the item does not show on the Pay Liabilities window.
     
  8. Select Premium Only Plan as the Tax tracking type, click Next.
  9. Use the default tax setup unless a tax adviser, accountant, or your cafeteria plan administrator has instructed otherwise. Click Next twice. (Calculating based on quantity is generally not needed for this item.)

    Note: The default tax setup is only valid when you use the Premium Only Plan (POP), under section 125 of the IRS code. This allows an employee to pay for insurance with pre-tax dollars. We recommend checking with your plan administrator or an accountant to make sure that you qualify.
     
  10. If most of the employees will have the same deduction rate and annual limit, enter those values. Otherwise, leave the fields blank. Click Finish.
  11. Add the item to each qualified employee record. (From the Lists menu, choose Employee List. Double-click an employee name to open an Edit Employee window. Click the How Do I? button for additional information.)

 

Important HIPAA information: Each health care practice is responsible for ensuring compliance with HIPAA and all applicable laws. We encourage health care providers to consult with legal counsel regarding their company's individual information practices and how to comply with HIPAA and any other applicable laws.

 

If these steps do not resolve the issue, you can read discussions and post messages and questions relating to your issue on the Intuit QuickBooks Community site for free or you can contact a technical support agent for additional guidance. Fees may apply.

 

 

 

 

KB ID# HOW12185
11/23/2014 10:40:54 AM
PPRDQSSWS400 9102 Pro 2013 735ac3