Both the employer and employee must have a profound knowledge of taxes. A key tax-saving plan that employees should know is the Section 125 affordable health plan. This plan offers healthcare benefits to employees, their spouses, and dependents that are pre-tax and reduce their tax liability.
One enhanced tax plan that an employee must explore includes BrightPath Advantage, a tax-saving Section 125 plan that leverages the benefits of a Preventative Care Management Plan. Let’s explore the Section 125 affordable health plan and BrightPath Advantage in detail to learn more about them.
What are Section 125 Affordable Health Plans?
Section 125 affordable health plans allow employees to pay for certain health benefits with pre-tax dollars, reducing their taxable income. Under Section 125 of the IRS Code, employers can offer a range of benefits such as health insurance, dental and vision care, and flexible spending accounts (FSAs). Employees can choose the benefits that best suit their needs, making healthcare more affordable and customizable.
These plans increase take-home pay by lowering tax liability. Employers also benefit through reduced payroll taxes, making Section 125 affordable health plans a cost-effective option for both employees and employers.
Different Types of Section 125 Affordable Health Plans
Section 125 plans offer various pre-tax benefit options that help reduce healthcare costs for employees while offering tax savings to employers. Here are the main types of Section 125 affordable health plans and what they include:
1. Premium Only Plan (POP)
Allows employees to pay their share of health insurance premiums with pre-tax dollars, reducing taxable income and increasing take-home pay.
2. Flexible Spending Account (FSA)
Lets employees set aside pre-tax money to cover eligible medical, dental, vision, or dependent care expenses not covered by insurance.
3. Dependent Care Assistance Plan (DCAP)
Helps employees use pre-tax funds to pay for childcare or dependent care services while they work, up to IRS-allowed limits.
4. Full Cafeteria Plan
Offers a wide range of benefit options like health, dental, vision, life insurance, and FSAs, allowing employees to select plans that meet their individual needs.
How Section 125 Affordable Health Plan Saves You More on Taxes
Section 125 affordable health plans offer valuable tax benefits by allowing employees to pay for healthcare and related expenses with pre-tax dollars. This reduces taxable income, resulting in lower federal, state, and Social Security taxes. Here’s how these plans help both employees and employers save money:
1. Pre-Tax Premium Payments
Employees can pay their health insurance premiums before taxes are deducted, reducing overall taxable income and increasing net pay.
2. Lower Federal and State Income Taxes
By reducing taxable wages, employees pay less in federal and, in most states, state income taxes.
3. Reduced Payroll Taxes for Employers
Employers save on their share of FICA (Social Security and Medicare) taxes since pre-tax contributions lower the total taxable payroll.
4. Tax-Free Reimbursements
Flexible Spending Accounts (FSAs) and Dependent Care Assistance Plans (DCAPs) offer tax-free reimbursements for eligible expenses, providing further savings.
5. Higher Take-Home Pay
With lower tax deductions from each paycheck, employees see more money in their take-home pay without increasing gross salary.
BrightPath Advantage: Affordable Health Plans with the Benefits of PCMP
BrightPath Advantage is a comprehensive Section 125 health plan by BrightPath that integrates the Preventative Care Management Program (PCMP) to deliver tax savings and enhanced wellness benefits for both employers and employees. This IRS-compliant solution allows employees to allocate pre-tax dollars toward health-related expenses, thereby reducing their taxable income and increasing take-home pay.
The plan includes advanced wellness services, all with no out-of-pocket costs for employees. BrightPath Advantage ensures compliance and minimizes administrative burdens for employers.
Top Reasons Why Employers and Employees Should Choose BrightPath Advantage
BrightPath Advantage offers a smart solution for reducing healthcare costs while enhancing benefits. Both employers and employees gain financial and wellness advantages through tax savings and value-added services, making it a win-win strategy for workplace health management.
Here are the top reasons why employers should choose BrightPath Advantage:
- Reduces payroll tax liability
- Saves $1,100 per participating employee annually
- Offers a compliant Section 125 solution
- Improves employee retention and lowers healthcare costs up to 5-10%
- No cost or financial risk to the employer
- Simplified implementation and administration
Here are the top reasons why employees should choose BrightPath Advantage:
- Increased social security with Group Term Life Insurance
- Access to 24/7 telehealth services, virtual care, and urgent care
- Includes mental health and wellness support
- Offers supplementary discounts on dental and vision care
- No out-of-pocket costs for covered services
- Employee Assistance Program and Minimal Essential Coverage
- Extended to employee, their spouse, and family members
- Supports long-term financial and physical health
Conclusion: Make Smart Choices for Your Health and Wallet
Affordable health plans combined with taxes Section 125 offer a powerful way to reduce healthcare costs and maximize tax savings for both employers and employees. By using pre-tax dollars for eligible expenses, participants enjoy lower taxable income, increased take-home pay, and access to essential wellness benefits.
Among these options, BrightPath Advantage stands out for its comprehensive, IRS-compliant approach that includes wellness services, telehealth, and supplemental benefits at no extra cost to employees. With seamless implementation, significant employer tax savings, and enhanced employee satisfaction, BrightPath Advantage is a smart, risk-free solution for businesses seeking to improve benefits while managing expenses effectively.
Ready to Reduce Your Healthcare Costs? Discover Affordable Health Plans Today
Book a call today to discover how BrightPath Advantage can maximize your tax savings, enhance employee benefits, and simplify health plan management tailored to your needs.
Reference:
https://www.aeisadvisors.com/what-is-a-section-125-and-what-it-means-to-employers
https://www.joinhomebase.com/blog/payroll-taxes-health-insurance
