You may elect to pay your medical and dental plan premiums, Flexible Spending Account contributions and Voluntary AD&D premiums through pre-tax payroll deductions. Because the Internal Revenue Service (IRS) Section 125 regulations allow your insurance premiums to be deducted on a pre-tax basis, your taxable income is reduced, and you pay less in taxes over the course of a year. The example below shows how pre-tax payroll deductions save you money.