If you’re offering health coverage but not fully leveraging IRS Code 125, there’s a good chance you’re leaving money on the table. A lot of companies think they’re “doing Section 125.” In reality, they’re only scratching the surface.

The truth is, IRS Code 125 was never meant to be a stand-alone tactic. It was designed as a framework. The real power shows up when it’s combined with structured health management and reimbursement strategies. That’s where most employers miss the opportunity.

At Elevate Benefits, our Elevate+ program doesn’t just check a compliance box. It leverages IRS Code 125 together with a fully managed Preventative Care Management Plan (PCMP) and a Self-Insured Medical Reimbursement Plan (SIMRP). The result? A more complete, compliant, and benefit-rich strategy that supports both employers and employees without adding out-of-pocket costs.

Let’s break this down in plain English.

What IRS Code 125 Actually Does for Employers

At its core, IRS Code 125 allows employers to structure benefit elections in a way that reduces taxable payroll exposure. But simply setting up a basic cafeteria structure doesn’t maximize impact.

What matters is how you design it.

When properly structured, it can:

• Lower payroll tax liability

• Reduce employer-paid FICA exposure

• Improve benefit participation

• Create predictable healthcare cost management

• Strengthen retention

The issue isn’t whether companies know about IRS Code 125. Most do. The issue is whether they’re using it strategically.

The Problem With “Basic” Section 125 Structures

Many businesses implement a simple cafeteria-style benefit election and stop there. No integrated health management. No reimbursement structure. No preventive framework.

That’s not optimization. That’s minimal compliance.

A standalone cafeteria structure may technically meet the Section 125 IRS Code framework. But it doesn’t create long-term cost control. And it doesn’t improve workforce health outcomes.

That’s where integration changes everything.

How Elevate+ Leverages IRS Code 125 the Right Way

Elevate+ is not a traditional Section 125 plan. It includes and leverages Section 125, but it combines it with:

• Preventative Care Management Plan (PCMP)

• Self-Insured Medical Reimbursement Plan (SIMRP)

This combination creates one of the most compliant and benefit-rich programs available.

Here’s what that means for your company:

Employer Advantages

With Elevate+, employers typically see:

• Average savings of ~$600 per W2 employee per year

• $60,000 in annual savings per 100 employees

• No out-of-pocket implementation cost

• Reduced healthcare claims (average $1,400 savings over 3 years)

• 30–45 day automated rollout

• Immediate bottom-line impact

That’s not theoretical. It’s operational.

More than 40,000 employees are enrolled in Group 2 structured programs like Elevate+. That level of adoption only happens when the numbers make sense.

Why Integration Matters More Than Ever

Healthcare costs continue to rise. Payroll expenses continue to rise. Recruiting remains competitive.

Forward-thinking employers aren’t just looking for “benefits.” They’re looking for leverage.

When you align IRS Code 125 with preventive care and structured reimbursement, you shift from reactive healthcare spending to proactive cost management.

That’s the difference.

Instead of simply offering a deduction mechanism, you create a benefit ecosystem that:

• Encourages early care

• Reduces emergency claims

• Improves employee engagement

• Stabilizes long-term healthcare exposure

What Employees Actually Experience

Employers care about savings. Employees care about access.

Elevate+ delivers both.

Here’s what employees receive:

• 3–4% net paycheck increase (~$100/month average)

• $0 copay telehealth

• Mental health and wellness support

• Access to Mayo Clinic wellness tools and health dashboard

• Universal Life coverage

• Disability protection

• Critical Illness coverage

• Spouse and dependent coverage

This is where the real value shows up.

When employees feel supported, they stay longer. They engage more. They use benefits more effectively.

And that reduces claims pressure.

Compliance Without Complexity

One of the biggest misconceptions about the Section 125 IRS Code framework is that it’s complicated and risky.

It can be, if you build it wrong.

Elevate+ is designed for automation and compliance from day one. Documentation, election management, plan design, and reporting are structured properly from the start.

• No guesswork.
• No patchwork compliance.
• No HR overload.

That’s critical because HR teams are already stretched thin.

Why Companies Miss the Opportunity

Most organizations fall into one of three categories:

• They’ve never implemented a structured Section 125 strategy.

• They have a basic cafeteria model with minimal optimization.

• They assume switching structures will be disruptive.

• All three assumptions cost money.

When structured correctly, implementation takes 30–45 days. Payroll integration is automated. Employee communication is handled. Compliance documentation is standardized.

The disruption risk is minimal.

The financial upside is measurable.

Long-Term ROI: It’s Not Just About Year One

The first-year payroll savings get attention. But long-term ROI is where the real story sits.

When preventive care is built into your benefit structure:

• Employees use telehealth early

• Mental health issues are addressed sooner

• Chronic conditions are identified earlier

• Urgent care replaces ER visits

• Claims volatility decreases

That’s why integrated models consistently reduce healthcare claims over a three-year period.

It’s stability. Not guesswork.

Culture, Retention, and Competitive Advantage

Benefits are no longer just transactional. They signal culture.

A company that invests in structured health support sends a message:

“We care about your long-term well-being.”

That message impacts:

• Retention rates

• Recruitment competitiveness

• Employee loyalty

• Productivity

• Absenteeism

This is why leveraging IRS Code 125 strategically is not just a finance decision. It’s a leadership decision.

Are You Actually Maximizing IRS Code 125?

Ask yourself:

• Are we only offering a basic cafeteria structure?

• Do we have integrated preventive care?

• Are we using reimbursement strategies to stabilize claims?

• Are we seeing measurable annual payroll savings?

• Is our implementation automated and compliant?

If the answer is no to any of these, you’re likely underutilizing the full potential of IRS Code 125.

And that’s fixable.

Why Elevate+ Stands Apart

Elevate+ was built specifically for modern employers who want:

• Measurable payroll savings

• Zero out-of-pocket cost

• Strong compliance structure

• Health-focused employee benefits

• Automated implementation

It leverages Section 125 together with PCMP and SIMRP to create one cohesive strategy.

Not a patchwork solution.

Not a generic cafeteria template.

A fully integrated framework.

That’s the difference between using IRS Code 125 and fully utilizing it.

Final Thoughts: Don’t Leave Strategy on the Table

Too many companies think they’re optimizing benefits when they’re only meeting minimum structure requirements.

The Section 125 IRS Code was designed to create flexibility and efficiency. But its full value shows up only when it’s integrated into a broader, health-centered strategy.

When structured correctly, it:

• Reduces payroll exposure

• Stabilizes healthcare costs

• Improves employee experience

• Boosts retention

• Strengthens your bottom line

• The real question isn’t whether IRS Code 125 works.

• The real question is whether your company is using it to its full potential.