This is our most beneficial strategy. It allows employers to save $573.60 per employee per year in FICA tax contributions while helping amplify all other benefits. There is no out-of-pocket cost to the employer or the employee to have this implemented. It DOES NOT interfere with your current or existing benefits and can be added on at no cost to strengthen the benefits you currently offer.
Attention Business Owners:
- NO COST PLAN
- Employers Save on Taxes, Employees Increase Pay
- Does not need to replace health insurance
- Increase employees pay up to $500 Per Month
- Save $573.60 per employee per year
- $0 Unlimited Primary Care / Urgent Care Visits
- Unlimited Prescription $0 Copay
- Unlimited Telemedicine $0 Copay
- 100% Preventative Care $0 Copay
Section 125 of the Internal Revenue Code, also known as the “cafeteria plan”, is a tax-advantaged benefits plan that allows employees to pay for certain benefits, such as health insurance, with pre-tax dollars. This reduces the employee’s taxable income, and as a result, the employee’s federal and, in some cases, state income taxes. Section 125 plans are also known as “cafeteria plans” because they allow employees to choose from a menu of tax-free benefits, such as health, dental, vision, and dependent care.
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Frequently Asked Questions
WHAT ARE THE INCENTIVES?
There are a few key tax incentives associated with Section 125 plans:
- Premium Only Plan (POP): Allows employees to pay for their portion of their health insurance with pre-tax dollars.
- Flexible Spending Accounts (FSA): Allows employees to set aside pre-tax dollars to pay for certain out-of-pocket healthcare expenses and dependent care expenses.
- Health Reimbursement Arrangements (HRA): Employers can reimburse employees for out-of-pocket medical expenses with pre-tax dollars.
- Commuter Benefits: Allows employees to set aside pre-tax dollars to pay for certain transportation expenses, such as parking and mass transit.
- Adoption Assistance: Allows employees to set aside pre-tax dollars to pay for certain adoption-related expenses.
WHY IS SECTION 125 IMPORTANT TO ME?
There are several reasons why an employee may choose to participate in a Section 125 plan, also known as a “cafeteria plan”:
- Tax savings: By paying for certain benefits, such as health insurance, with pre-tax dollars, employees can lower their taxable income and increase their take-home pay.
- Flexibility: Section 125 plans allow employees to choose from a menu of tax-free benefits, such as health, dental, vision, and dependent care. This allows employees to choose the benefits that are most important to them and that best fit their needs.
- Cost savings: By using pre-tax dollars to pay for certain benefits, employees can save money on their overall healthcare expenses. This can be especially beneficial for employees with high medical expenses.
- Health savings: With Section 125 plans, employees can set aside pre-tax dollars to pay for certain out-of-pocket healthcare expenses and dependent care expenses, which can help alleviate the financial burden of these expenses.
- Commuter benefits: Section 125 plans also allow employees to set aside pre-tax dollars to pay for certain transportation expenses, such as parking and mass transit, which can also help alleviate the financial burden of these expenses.
Overall, Section 125 plans can help employees save money on taxes and provide them with more flexibility when it comes to choosing and paying for benefits.
Section 125 Explained
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