What is a Section 125 Health & Disease Prevention Plan?
A Tax Savings Plan refers to employer-sponsored strategies that reduce taxable income for both the business and its employees. These plans not only help small business owners lower payroll taxes, but also give employees access to pre-tax benefits like health insurance, dependent care, and commuter benefits.
Featured Strategy: Section 125 Cafeteria Plan
Also known as a Cafeteria Plan, a Section 125 plan allows employees to pay for qualified expenses with pre-tax dollars, reducing both their income tax and your payroll tax obligations.​ A Section 125 Health & Disease Prevention Plan serves as a valuable employee benefit, allowing individuals to transform taxable benefits, such as their salaries, into nontaxable ones. With this plan, employees can earmark a portion of their pretax cash earnings to cover qualified benefits.
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By allocating funds before taxes are deducted, employees can realize savings of up to 30 percent on local, state, and federal taxes. Notably, participation in a Section 125 plan remains optional. While some employees may opt for standard cash wages, many find the opportunity to reserve funds before taxes to be immensely beneficial.
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The Section 125 plan provides employees with the flexibility to customize their benefits according to their unique requirements. Through this plan, individuals can optimize their take-home pay while still accessing valuable, tax-saving options.
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Key Benefits:
✔ Employees pay less in taxes without reducing take-home pay
✔ Employers save on FICA taxes
✔ Covers healthcare premiums, dependent care, dental/vision, and more
✔ Helps attract and retain talent in a competitive job market
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What are the advantages of Section 125 Health & Disease Prevention Plans?
Section 125 plans present a plethora of advantages for both employees and employers alike. Among these, a standout benefit is the substantial tax savings for employees. When employees designate funds to their Section 125 plans, those funds evade taxation as regular income. Consequently, this translates into reduced tax liabilities for employees, enabling them to retain a greater portion of their earnings, rewarding their dedication and hard work.
Section 125 Health & Disease Prevention Plan can Improve Your Bottom Line.
The purpose of Health & Disease-Prevention Plan is to help revolutionize workplace health services, ensuring that companies, regardless of size, have access to top-tier yet affordable care. Embedded within our program is a cutting-edge Preventative Healthcare Benefit Health Insurance Policy for Employees. Through this initiative, we empower employees with a comprehensive suite of preventative healthcare solutions, encompassing Telemedicine, Health Coaching, Smoking Cessation, and Healthcare Advocacy.
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The Health & Disease-Prevention Plan platform reduces health care costs and uniquely implements a Section 125 plan (Cafeteria Plan), which can often reduce taxable income for employees and creates payroll tax savings for employers.
How It Works
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Employees elect pre-tax contributions during enrollment
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You save on payroll taxes, and they save on income taxes
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Funds are used for eligible medical, childcare, or transportation expenses
Real-World Example
A business with 10 employees enrolled in a Section 125 plan can save $500–$1,000+ per employee annually in payroll taxes — while giving employees greater flexibility in covering everyday health or family costs.
Tax Savings Add Up
Offering a tax savings plan like Section 125 can result in:
✔ Lower taxable income for your business
✔ Reduced employee income tax liability
✔ Fewer out-of-pocket expenses for things already use
✔ Improved morale and retention
And it costs you nothing out of pocket to get started.
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Compliance + Easy Administration
We partner with top administrators to ensure your plan is:
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Legally compliant
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Easy to enroll
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Simple to track
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Integrated with your payroll system
Section 125 Plan Health & Disease Prevention Plan Offers
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Digital Health Portal
Provides a specialized integrated technology suite, assisting your employees to establish a healthy lifestyle, simultaneously improving employee productivity and reducing the need for health services by preventing health issues.
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Personalized Coaching
Provide employees with access to workplace certified health coaches who are personally assigned to them in order to give employees a detailed and effective regiment that will ensure their personal health.
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Telemedicine
Consult through electronic communication including video conferencing, telephone and email. Eliminating the need for travel to the doctor’s office, and opens up availability for employees who previously may have had trouble getting in to see a doctor.
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Behavioral Health
Behavioral clinicians provide assessment, diagnosis, consultation, and brief psychotherapy to address each employee's behavioral health needs through live, interactive video conferencing.
Risk Identification
Predict and classify 35 different conditions and identify and rank the health risks of your unique environment.
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Genomics Testing
Leveraging this individualistic approach with an emphasis on each employee and offer each participant an opportunity to set goals for his or her physical and mental well-being based on their genetics.
🧠FAQs
What is a Section 125 Plan?
A tax-advantaged benefits plan that allows employees to use pre-tax dollars for eligible expenses.
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Do I need to have full-time employees?
No — it works for W-2 staff regardless of hours, and may even include business owners in some cases.
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Is it expensive to set up?
Not at all. We work with compliant administrators and most plans are affordable and scalable based on business size.
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When should I set it up?
The sooner, the better — it must be in place before the plan year begins, so don’t wait until tax season.
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Connect This with Other Employer Benefits. Employers who implement a Tax Savings Plan often pair it with:
✔ Retirement Planning (SEP IRAs, Profit Sharing Plans)
✔ Business Protection (Key Person Life Insurance)
✔ Bookkeeping & Tax Optimization
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Each piece complements your tax-saving goals while supporting business growth.
Section 125 Tax Savings Plan: Health and Preventative Plan Program. Want to learn more?
Connect with a licensed financial professional