Section 125

Section 125 is a key component to the BioMed program. The Internal Revenue Code enacted Section 125 as part of the Revenue Act of 1978 (Public Law 95-600) that became effective on January 1, 1979.

Prior to this policy change, employees paid for benefits like health insurance with after-tax dollars and employers had limited flexibility to offer tax-advantaged benefit plans. The law aimed to reduce taxable income for employees and payroll taxes (FICA) for employers while encouraging the provision of benefits.

As a result, Section 125 allows employers to set up a plan, which lets employees pay for certain qualified benefits with pre-tax dollars. These benefits include health insurance premiums.

Although this law has been around for more than 45 years, now with our cutting-edge tax analyzing software, we can instantly calculate the FICA tax savings (7.65% of pre-tax contributions) for employers and the additional take-home pay for every employee each pay cycle. Our software delivers real-time insights, making it easier than ever to maximize the financial benefits of Section 125 for both employers and their workforce.

Discover how BioMed plan benefits can shine a ray of light on your business with significant cost reductions using Section 125.