Section 125 Plan: Save on Health Insurance Premiums, Boost Employee Satisfaction, and Enhance Your Bottom Line

A Section 125 Plan, what can it do for you? As a business owner, you’re probably aware of the significant role health insurance plays in employee recruitment and retention. However, with rising healthcare costs, it can feel like a burden on both your business and your employees’ wallets. But there’s good news: The Section 125 Plan offers a smart way to save money on premiums, boost employee take-home pay, and create a happier, more productive workplace.

What is a Section 125 Plan?

Section 125 of the Internal Revenue Code allows businesses to offer Cafeteria Plans, which enable employees to pay for certain benefits—like health insurance premiums—using pretax dollars. By reducing taxable income, both employees and employers can enjoy substantial savings.

While these plans are often called Cafeteria Plans, they’re great flexible benefits to the employees and the employers. In a Section 125 Plan, with iHub Vantage, neither the employers or the employees have any out-of-pocket cost and if fact employees can get a small increase in their take-home pay.

Benefits for Employees:

1. Lower Taxes = Higher Take-Home Pay

Section 125 plan reduces employees taxable income, and in turn increases their take-home pay while at the same time adding additional health benefits for themselves and their family members.

Employees can see a monthly increase of $30 to $300 in take-home pay by participating in the iHub Advantage Benefit program.

2. Enhances the benefits of Your Existing Employee Health Package

If health insurance is already in place, the Section 125 plan, doesn’t disrupt or replace your primary health insurance needs. However, by using the Section 125 plan, employees will reduce usage of their Primary Care resulting in future savings.

3. Benefits Employees Love

Employees love having No Copay, No deductibles, and No Coinsurance.

Benefits for Employers:

1. Save on Payroll Taxes

Employers benefit from Section 125 plans because they don’t have to pay Social Security and Medicare taxes on employees’ pretax contributions. This means savings on payroll taxes for the business.

2. Attract and Retain Top Talent

In today’s competitive job market, offering comprehensive benefits like Section 125 plans can help differentiate your business. Employees want affordable healthcare, and by providing these pretax benefits, you demonstrate that you care about their financial well-being.

3. Enhanced Workplace Morale

Employees who feel valued are more engaged and productive. By reducing their tax burden and providing them with greater flexibility in managing their benefits, you help create a positive workplace culture.

Section 125 Tax Exemptions:

• Federal Income Tax Exemption: Contributions to the plan are exempt from federal income tax, reducing the taxable income of employees.
• Social Security & Medicare Tax Exemption: Both employees and employers can avoid paying Social Security and Medicare taxes on contributions to the plan.
• State Tax Considerations: While Section 125 plans offer federal tax savings, the impact on state taxes varies. It’s important to consult with tax professionals to understand state-specific tax implications.

How to Implement a Section 125 Plan in Your Business:

1. Setup a consultation with iHub Advantage member benefits specialist.
2. Enrollment is done by the enrollment specialist team, so there is no extra burden to your HR department.
3. There is no special time of year that the enrollment has to be done.

Key Considerations:

• Health and Wellness at no Net Cost for the employer and employee.
• Focus is on predictive & preventative health before it becomes a health insurance issue.
• Reduction of Employer’s payroll through a reduction in their payroll tax liability by eliminating the matching FICA taxes of 7.65%.
• Unlimited Tele-Health Benefits

A New Alternative: Amaze Health

For businesses looking for a more innovative approach to healthcare benefits, ihub Advantage program Amaze Health offered through the iHub Advantage is a concierge medical benefit program designed to simplify healthcare access for both employers and employees.

Key Benefits:

• 24/7 Access to Doctors: Imagine being able to reach a doctor in under 10 seconds, any time of day or night. With Amaze Health, employees and their families gain access to round-the-clock medical support.
• No Health Insurance Required: Amaze Health is not insurance, so you don’t need to worry about navigating complex health insurance requirements. It’s a great option for companies that may not be required to provide traditional health insurance but still want to offer valuable health benefits.
• No Out-of-Pocket Expenses for Employers or Employees: Best of all, there is no net out-of-pocket cost for employers or employees. The program is designed to be a cost-effective solution that benefits both parties.

Final Thoughts:

Implementing a Section 125 plan can be a game-changer for your business. Not only can it help reduce the overall cost of employee benefits, but it also boosts employee satisfaction by lowering their taxable income and increasing their take-home pay. Employees can better manage their personal healthcare needs. And with Amaze’s Health concierge medical benefits, your business can provide a cutting-edge healthcare solution without the complexity and cost of traditional health insurance.

If you’re ready to start reaping the benefits of a Section 125 plan or want to explore other innovative employee benefits solutions like Amaze Health, the time to act is now. Your employees—and your bottom line—will thank you.