Section 125 & 105 Plans
Tax reduction through FICA taxes is possible because the IRS allows qualified wellness plans to be used to reduce the tax burden for employers offering qualified wellness plans to their employees.
Section 125 & 105 Plans
Section 125 Plan (Large Companies)
Section 125 is a written plan that lets employees choose between two or more benefits. The savings on these benefits can be used to buy supplemental health benefits such as a short-term care policy or dental policy. Employees receive benefits as pre-tax deductions. Employees, their spouses, and their dependents can all benefit from section 125 plans.
Section 105 Plan & MEC (Small Companies)
Using a Section 105 plan reduces the amount of federal insurance contribution act tax (FICA) and federal unemployment tax (FUTA) an employer pays. Employers can deduct reimbursements as a business expense and exclude them from wages subject to FUTA and the employer portion of FICA. Their employees can use these funds to purchase supplemental health benefits such as a short-term care policy or dental policy.
Education & Implementation
1
Census Date
Census template will be sent to you to gather the information needed to calculate the Benefit Reserves
2
Proposal
​Proposal provided which includes Benefit Reserves and potential company savings
3
Enrollment
Enrollment conducted virtually or on site. We reach out to employees to educate and inform about benefits or increase in pay. Phone calls, emails, text messages and webinars are all used with your employees.
4
Lead Time
Lead time 30-45 days.
Payroll call completed with client on or around the effective date of coverage. Our team will integrate with the employer's current payroll software to create a seamless process.
5
Savings Visualization
Client starts to see savings immediately in the first payroll run. Savings can be rolled over into investment account to achieve maximum gains. Our team performs dry payroll runs/audits to ensure 100% accuracy.
Paycheck Example
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Monthly Gross Income Remains The Same.
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All Pre-Tax deductions are unchanged.
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This Plan is funded by a Section 125 premium deduction Taxable Income is reduced by $800 per month.
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Funding for section 105 plans will be the same layout.
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The Participant received an increase of $206.88 due to the Wellness after-tax reimbursement.
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The Wellness Plan fee of $80 per month is deducted tax-free The Participant received $126.88 in Benefit Reserve to spend on supplemental benefits.
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Take-home pay remains the same as before the Health & Wellness Plan.
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Both employee and employer still have significant tax reduction and savings which can be rolled over into investment accounts to maximize capital gains.