Today’s businesses face two parallel challenges: keeping costs under control while offering competitive benefits that attract and retain talent. A well-designed Section 125 plan, commonly referred to as a cafeteria plan, solves both problems. It allows employers to offer health plan premiums pre-tax, lowering taxable income for employees and payroll tax liabilities for the business.
But here’s the kicker: most cafeteria plans only deliver surface-level savings. That’s why thousands of businesses choose BrightPath Advantage, a fully managed, zero-cost plan that takes the core benefits of a Section 125 structure and adds powerful wellness and insurance benefits, for employees and their families.
Let’s walk through how to set up a Section 125 plan and why doing it with BrightPath Advantage is the smarter move.
What Is a Section 125 Cafeteria Plan?
A Section 125 cafeteria plan benefits, helps businesses reduce payroll taxes while employees save on healthcare through pre-tax benefits. But most plans stop at basic premium deductions. BrightPath Advantage takes it further, combining full Section 125 compliance with wellness programs, $0 copay healthcare, family coverage, and insurance benefits at zero employer cost. Employers save up to $1,100 per W-2 annually, while employees gain access to telemedicine, mental health support, and Mayo Clinic wellness tools. Setup takes 30–45 days, fully managed and audit-ready.
A Section 125 cafeteria plan is an IRS-approved employee benefits plan that lets workers pay for eligible benefits, like insurance premiums or healthcare accounts, using pre-tax dollars.
This means:
- Employees get more out of every paycheck
- Employers pay less in payroll taxes
- Everyone wins, with no disruption to existing coverage
But to unlock the full power of a 125 plan, it needs to go beyond tax savings. That’s where BrightPath Advantage comes in.
Step-by-Step: How to Set Up a Section 125 Plan
Setting up a 125 cafeteria plan is easier than it sounds, especially with a partner like BrightPath Group. Here’s the typical setup process:
- Determine Eligibility
Section 125 plans are only available to W-2 employees. Independent contractors (1099) are not eligible. Most businesses with five or more W-2 staff can benefit immediately.
- Create a Written Plan Document
IRS rules require a formal plan document that outlines:
- The types of benefits offered
- Eligibility and participation rules
- Procedures for mid-year changes
With BrightPath Advantage, this documentation is handled entirely for you, fully compliant and audit-ready.
- Choose the Right Benefits Mix
This is where BrightPath goes far beyond the basics. Instead of offering just premium deductions, the BrightPath Advantage plan bundles together:
- A Preventive Care Management Plan (PCMP)
- A Specialized Insurance Medical Reimbursement Plan (SIMRP)
- Full Section 125 compliance
- All at zero cost to the employer
- Roll Out to Employees
Our team helps you with everything, from employee onboarding to benefits education and enrollment support. Implementation takes just 30–45 days, with zero disruption to your current health plan.
BrightPath Advantage: Beyond Tax Savings
Let’s talk numbers. With the standard 125 cafeteria plan, employers may save ~$600 per W-2 annually. But with BrightPath Advantage, you get:
- $1,100 per W-2 employee in yearly savings
- 5–10% reduction in overall healthcare costs
- Full automation and ongoing plan management
- No cost, no hassle, no guesswork
That’s $110,000 in savings for every 100 employees, year after year.
What Employees Get: Tax Savings + Total Care
The best part? Your employees benefit too, without losing any take-home pay. The BrightPath Advantage plan delivers:
- $0 copay healthcare services
- 24/7 Telemedicine & Virtual Care
- Family coverage with 12 care visits per year
- Mental health, addiction, and counseling support
- Mayo Clinic wellness programs
- Group Term Life Insurance ($60–$100/month)
- RX, Dental, and Vision, all with no copays
All of these benefits extend to spouses and dependents, at no cost to your employees.
Compliance Made Simple
BrightPath Advantage meets all Section 125 cafeteria plan requirements, including:
- Non-discrimination testing
- Document management
- Annual updates
- ACA and IRS compliance
You stay fully protected, without lifting a finger.
Why Employers Choose BrightPath
Thousands of companies have already upgraded their tax strategy and employee benefits cafeteria plan experience with BrightPath Advantage. Here’s what makes it a game-changer:
- Immediate tax savings
- Zero out-of-pocket cost
- 30–45 day setup
- Custom employee benefits platform
- Long-term wellness impact for families
- Group Term Life + MEC + RX coverage, all at $0 copay
With over 30,000 employees already enrolled, BrightPath Group is leading the way in modern, compliant, and cost-efficient health benefit strategies.
A Smarter, Healthier Future Starts with BrightPath Advantage
Get your free proposal to discover how much your business could save with a better pre-tax benefit plan.