A Smart Way to Reduce Taxes & Healthcare Costs

Many business owners focus on the upfront costs of offering benefits—but have you considered what it’s costing your business not to offer a Section 125 plan? By skipping this valuable pre-tax benefits program, employers face unnecessary tax expenses, higher turnover rates, and reduced competitiveness in attracting talent.

If you’re an employer without a Section 125 plan, here’s what you’re leaving on the table—and how The Policy Shop can help you turn things around.

You’re Paying Higher Payroll Taxes Than Necessary

A Section 125 plan allows employees to pay for benefits like health insurance and flexible spending accounts (FSAs) with pre-tax dollars—which also reduces your payroll tax liability.

Missed Tax Savings Example:

Without a Section 125 plan, both employers and employees pay more in taxes. Here’s how it breaks down:

• Employee earns over $25,000 per year and contributes toward health insurance.
• Without a Section 125 plan, there is no offset to taxable income, therefore subjecting the employer to higher FICA and FUTA payroll taxes.
• Employers typically pay 7.65% in payroll taxes (Social Security & Medicare).
• That’s $573 in unnecessary payroll taxes per employee per year—just for not offering a Section 125 plan!

Multiply that across your workforce, and the numbers add up quickly.

👉 Solution: Setting up a Section 125 plan eliminates payroll tax on eligible benefits, saving employers thousands per year.

You’re Struggling to Attract and Retain Top Talent

In today’s job market, employees expect competitive benefits. Without a Section 125 plan, your business is at a disadvantage when it comes to hiring and keeping great employees.

How a Section 125 Plan Improves Retention:

✅ Employees take home more pay due to pre-tax deductions.
✅ Offering pre-tax benefits increases job satisfaction and loyalty.
✅ A robust benefits package makes your company more attractive to new hires.

💡 Did You Know?

Studies show that 75% of employees are more likely to stay with a company that offers strong benefits. By not implementing a Section 125 plan, you risk higher turnover and increased hiring costs.

Your Employees Are Taking Home Less Money

Without a Section 125 plan, employees are missing out on valuable pre-tax savings, which directly affects their take-home pay.

Example of Employee Take-Home Pay Impact:

• An employee earning $50,000/year with $5,000 in annual health insurance premiums
• Without a Section 125 plan, this $5,000 is taxed, reducing their paycheck by approximately $1,200 per year
• With a Section 125 plan, they keep that $1,200 instead of losing it to taxes

💰 That’s like giving your employees a raise—without increasing salaries!

You Risk Falling Behind on Compliance

A Section 125 plan isn’t just about tax savings—it also helps businesses stay compliant with IRS regulations.

What Happens Without a Section 125 Plan?

❌ Increased tax liability due to non-pre-taxed benefits
❌ Potential penalties for improper benefit structuring
❌ Missed deductions that could reduce taxable business income

By implementing a compliant Section 125 plan, you avoid costly tax surprises and legal risks.

You’re Missing Out on a Simple, Cost-Effective Benefit Solution

The best part? Setting up a Section 125 plan is easy—and it pays for itself through tax savings month One.

What Does It Take to Set Up a Section 125 Plan?

✔ A simple plan document outlining employee eligibility and benefits
✔ Payroll adjustments to deduct benefits pre-tax
✔ Communication to employees about how they’ll save money

It’s not expensive to set up, but it’s costing your business more by not having one.

Don’t Let These Hidden Costs Drain Your Business—Take Action Today!

Not offering a Section 125 plan is like handing over extra money to the IRS while making it harder to attract and retain employees.

Why keep losing money? The Policy Shop specializes in helping businesses like yours maximize tax savings, improve benefits, and stay compliant.

📞 Contact The Policy Shop today to set up a Section 125 plan for your business and start saving!