What benefit is typically included in a Premium Conversion Plan?

A Premium Conversion Plan allows employees to pay for certain benefits on a pre-tax basis, thus reducing their taxable income. One of the most common benefits included in such plans is group term life insurance up to $50,000. The ability to have this coverage deducted pre-tax makes it an attractive option for employees, as they effectively save on taxes while ensuring they have life insurance protection.

Other types of insurance, such as long-term care insurance and whole life insurance, typically do not fall under the typical pre-tax benefits associated with Premium Conversion Plans. Long-term care insurance, for instance, might have different tax treatment and is often not offered through a Premium Conversion Plan. Whole life insurance is a permanent form of life insurance that builds cash value and isn’t generally part of a flexible benefits plan. Employee stock options pertain to equity and compensation packages and are not related to health or insurance benefits under a Premium Conversion Plan. Thus, the inclusion of group term life insurance aligns well with the purpose of these plans, which is to offer employees tax advantages while ensuring they have essential coverage.