Frequently Asked Questions

Through a Section 125 cafeteria plan, employees redirect a portion of gross pay toward qualified benefits. This reduces taxable wages, which in turn lowers the employer's FICA obligation by 7.65% (6.2% Social Security + 1.45% Medicare) on every dollar of premium.

The result is a net profit increase of $700–$1,100+ per employee annually—without reducing employee take-home pay or disrupting existing benefit structures.

Yes. The structure is fully compliant with IRS Code and regulations and is supported by official IRS memorandums and Chief Counsel Advice (CCA).

Key legal foundations include:

• IRC Section 125 (cafeteria plans)
• IRC Section 104(a)(3) (after-tax premium exclusion)
• Treasury Regulation §1.104-1(d)
• Revenue Ruling 69-154

The plan is implemented and administered by a licensed TPA with complete documentation and audit-ready records.

This is a cafeteria plan arrangement under Internal Revenue Code Section 125, using insured wellness and fixed indemnity benefits.

The dual-premium structure ensures:

• Pre-tax premiums comply with §125, §105, and §106
• After-tax premiums comply with §104(a)(3)

The compliance framework aligns with IRS regulations and is supported by relevant IRS memorandums and Chief Counsel Advice (CCA).

No. This supplements your current benefits. There is no change to your major medical plan or existing insurance arrangements.

The program adds enhanced wellness benefits (telemedicine, telemental health, critical illness coverage, etc.) while generating FICA savings through the Section 125 mechanism.

Minimal HR involvement for setup — no HR time required after the first payroll.

The TPA handles onboarding, compliance, employee education, and ongoing administration. The plan integrates with major payroll systems including ADP, Paychex, Paylocity, and others.

Implementation typically takes 2-3 pay periods from approval to first savings.

Employees are enrolled digitally with clear notices. Opt-out is available:

• Before the start date
• For 30 days after launch
• At open enrollment
• Following a qualifying life event

There is no negative impact on employees' net take-home pay—the program is designed to be neutral or positive for employee cash flow.

No. There are no out-of-pocket costs to the employer or employees. Program costs are covered by payroll tax savings.

The employer realizes net savings after all TPA administration fees, and employees receive enhanced benefits with no reduction in take-home pay.

• 24/7 telemedicine access for the entire household
• Telemental health services (psychiatry, counseling, therapy)
• Critical illness coverage (cancer, heart attack, stroke)
• Accident coverage with fixed payments
• Preventive labs and health screenings
• Access to 800+ no-cost prescriptions
• Hospital indemnity for extended stays
• Dental, vision, and hearing discounts

Coverage extends to spouse/partner and dependents up to age 26 for most benefits.

Employers across many industries including:

• Restaurants and hospitality
• Retail
• Logistics and distribution
• Healthcare
• Automotive
• Non-profits
• Manufacturing

Results scale with eligible headcount and wage distribution. Companies with 50+ employees typically see the strongest ROI.

As with any tax-advantaged benefit, there is potential IRS scrutiny. The key risks are improper administration or lack of documentation. These risks are minimized through:

• Grounded in IRS authority — fully aligned with IRS Code, regulations, memorandums, and Chief Counsel Advice (CCA)
• Licensed TPA administration — the plan is designed, implemented, and operated by a third-party administrator, not by your HR staff
• Audit-ready documentation — all payroll adjustments, notices, and elections are maintained to withstand IRS or DOL review
• Employee protection — no reduction in net take-home pay

With these safeguards, compliance risk is minimized while preserving the full financial upside.