I just wrote a blog post about tax-free benefits and some other ideas about payroll. This was one of the myths. Read the entire blog post, but here’s my answer to that question.
Qualified benefits offered under a cafeteria or Section 125 plans are exempt from FICA. This includes contributions made toward a medical, dental, vision and accident insurance plan and a flexible spending account, such as dependent care assistance and medical care reimbursements. Payments toward health savings accounts and group-term life insurance of $50,000 or less, plus qualified transportation expenses and disability insurance, are exempt from FICA.