This guide breaks down Section 125 and pre-tax benefits, explains their financial advantages, and shows how BrightPath’s Preventative Care Management Program (PCMP) makes the process seamless for employers.
A Section 125 Plan, also known as a Cafeteria Plan, is an IRS-approved benefits arrangement that allows employees to pay for certain benefits using pre-tax dollars. This means that eligible deductions—such as health insurance premiums, flexible spending accounts (FSAs), and dependent care assistance—are taken out of an employee’s paycheck before taxes are applied.
In this scenario, the employee saves $60 per month ($720 per year) simply by enrolling in pre-tax benefits through a Section 125 plan.
Employees benefit from a Section 125 plan primarily through pre-tax
deductions, which lower their taxable income. Here’s an example of how it
works:
Reduces taxable income, leading to higher take-home pay.
Lowers employer tax liability, including FICA and FUTA taxes.
Employees can choose from a range of pre-tax benefit options.
Ensures that benefit offerings remain tax-advantaged and compliant.
Employees benefit from a Section 125 plan primarily through pre-tax
deductions, which lower their taxable income. Here’s an example of how it
works:
Employees can pay for medical, dental, and vision coverage with pre-tax dollars.
Pre-tax savings for medical expenses, dependent care, and commuting costs.
Tax-advantaged savings for future medical expenses.
Helps cover childcare costs using pre-tax funds.
Meets all IRS, ACA, and HIPAA regulations.
BrightPath handles all setup, integration, and compliance.
The program funds itself through payroll tax savings.
Employees enjoy enhanced benefits without reducing take-home pay.
No, participation is optional. However, most employees opt in
because it lowers their taxable income and increases take-
home pay.
No, participation is optional. However, most employees opt in
because it lowers their taxable income and increases take-
home pay.
No, participation is optional. However, most employees opt in
because it lowers their taxable income and increases take-
home pay.
No, participation is optional. However, most employees opt in
because it lowers their taxable income and increases take-
home pay.
BrightPath Group is here to help you implement a Section 125 plan effortlessly while ensuring full compliance and maximum savings.
