Peak Payroll Solutions helps employers control costs and offer benefits that can increase employee satisfaction and retention through Section 125 plan administration.
As health care benefits become increasingly expensive, Section 125 plans represent innovative and cost-effective program options. Employers can control costs while offering new benefits—benefits that are highly customizable to employees’ unique needs.
Section 125 plans are tax-advantageous for employers and employees. Employers save on their portion of FICA, FUTA, SUTA and workers’ compensation premiums. Employees save 25 cents to 50 cents in taxes for every dollar they contribute to the plans, as their pretax contributions are not subject to federal, state or Social Security taxes.
Premium Only Plan
Reduce your payroll taxes without cutting your payroll. Employers and employees save on taxes when employees pay their portion of insurance premiums on a pre-tax rather than an after-tax basis. By paying for their share of group benefits pre-tax, employees typically save between 25% and 40%. Employers typically save nearly 8% on their portion of Social Security (FICA) and federal unemployment taxes. Those savings alone often pay for plan administration costs.
Health Savings Accounts
Allow employees to make pre-tax contributions to an investment account or an HSA bank account from which they can pay for medical care. The accounts are portable and not subject to the risk of forfeiture at the end of the year.
Flex Spending Accounts
Save your employees and your company even more in taxes by allowing them to pay for eligible expenses on a pre-tax basis. Flexible Spending Accounts include:
- Dependent Care Reimbursement
Provide employees a means to allocate pre-tax dollars to reimburse eligible dependent care expenses—the care of an employee’s child, disabled spouse, elderly parent or other dependent who is physically or mentally incapable of self-care. - Medical Expense Reimbursement
Allow employees to pay for out-of-pocket medical expenses not covered by insurance with pre-tax dollars. Deductibles, co-payments, prescriptions, dental expenses, vision care, glasses, contact lenses and chiropractic treatments are among the eligible expenses.