Get Started Now

Table of Contents

Understanding Section 125 Pre-Tax Deduction

A Section 125 pre tax deductions enable employers to design benefits so employees can benefit from important wellness and preventive care services without affecting their take-home pay. Elevate+ uses Internal Revenue Code Section 125 to develop a formalized strategy that complements standard benefits packages.

This strategy is formulated to address both routine healthcare and targeted wellness programs. Workers are provided with the resources to enhance health results, while families are provided with significant assistance. This is where Elevate+ programs excel because they merge traditional Section 125 plan benefits with supplemental preventive and self-insured medical coverage.

Although Sec 125 taxes and 125 cafeteria plan benefits are occasionally brought up during conversations regarding payroll, the true purpose of such a plan is to enhance employee health and satisfaction, not merely dealing with deductions.

Who Can Benefit from Section 125 Pre-Tax Deduction?

Employers and employees both benefit significantly from a Section 125 pre-tax deduction.

Employers Have:

  • Savings of about $1,100 per W2 employee annually
  • 5–10% decrease in total healthcare expenditures
  • Quick, automated deployment in 30–45 days
  • Decreased healthcare claims (with an average of $1,400 over three years)
  • Enhanced employee engagement and retention

Employees Get:

  • 24/7 virtual care and telemedicine at $0 copay
  • Spousal and dependent family coverage with 12 visits a year
  • Access to mental health care, counseling, and addiction services
  • Mayo Clinic programs and interactive health dashboards
  • Group Term Life Insurance with a value of $60–100 per month
  • Vision, dental, and prescription discounts
  • In-person urgent care with no co-pays, including prescription coverage
The program makes employees feel valued, cared for, and healthy, while employers directly reduce costs and increase productivity.

Benefits of Section 125 Pre-Tax Deductions for Employers and Employees

For Employers:

  • Save around $1,100 per W2 employee annually
  • No setup or management costs upfront
  • Lower healthcare claims by around $1,400 in three years
  • Fast implementation and automation of administrative processes
  • Improved employee retention and satisfaction
  • Immediate bottom-line boost

For Employees:

  • Hold onto take-home pay while tapping into upgraded benefits
  • 0$ copayment access to 24/7 telemedicine and virtual visits
  • Mental health, addiction, and counseling programs
  • Family coverage, including spouses and dependents
  • Group Term Life Insurance and optional protective coverage
  • Mayo Clinic tools and resources to track and enhance health

By synergizing Section 125 IRS code provisions with proactive wellness programs, both employers and employees gain in concrete ways.

What Expenses Are Covered In a Pre-Tax Deductions Plan?

A Section 125 pretax deductions program such as Elevate+, can pay for a variety of expenses, including:

  • Preventive health exams and regular screenings
  • Mental health therapy and EAP counseling
  • Addiction treatment programs
  • Telemedicine and virtual healthcare services
  • Prescription medication with $0 copay
  • Vision and dental care discounts
  • Spouse and dependent coverage
  • Chronic condition management

These features are more than the basics and align with the Preventative Care Management Program tax credit to further enhance health and wellness.

Creating a Section 125 Pre-Tax Deductions

Creating a Section 125 pre-tax deduction program can be easy when done with Elevate+. Here’s how it works:

Step 1: Assessment

Measure workforce size, needs, and current benefit programs.

Step 2: Customization

Add PCMP and SIMRP to the existing Section 125 infrastructure.

Step 3: Implementation

Automate benefit access and payroll deductions.

Step 4: Compliance & Support

Ensure compliance with IRS Code 125 and companion regulations.

Offer continuous support to employers and employees. Minimal effort from HR teams is needed to complete the process, making it feasible for small and large employers.

What's Included in Section 125 Pre-Tax Deductions?

A detailed Section 125 pre-tax deduction program has the following:
  • Preventative Care Management Program (PCMP) - 24/7 telemedicine, health dashboards, and preventive screenings.
  • Self-Insured Medical Reimbursement Plan (SIMRP) - reimbursement of qualified medical costs that are usually not covered under normal insurance.
  • Mental Health and Employee Assistance Programs (EAP)
  • Group Term Life Insurance worth $60–100/month
  • Disability, critical illness, and universal life coverage
  • Mayo Clinic wellness tools for better tracking of health
All of these elements together enhance Section 125 plan benefits as much as possible to benefit employees and their families in all ways.

Why Section 125 Pre-Tax Deductions Should Be Considered?

Within a competitive job market, providing basic health benefits is no longer sufficient. Plans such as Elevate+ demonstrate that section 125 pre-tax deductions have the power to drive employee satisfaction, health, and loyalty.

Key benefits are:

  • Employees are cared for through 24/7 telemedicine and preventive care
  • Families receive full coverage
  • Employers save $1,100 per W2 employee annually
  • Healthcare claims decrease, enhancing overall cost-effectiveness
  • Completely automated setup and compliance with Internal Revenue Code section 125

With over tens of thousands of workers covered under Elevate+, these programs are becoming a part of standard corporate wellness strategy.

Although while mentioning Section 125, how to reduce payroll taxes as an employee, and whether employee benefits are pre-tax are discussed frequently, the real worth is in the health, wellness, and family coverage provided by employers.

Frequently Asked Questions

What are Section 125 deductions?
They allow employees to enjoy wellness and preventive benefits without affecting their take-home pay.
Employers are also saving on healthcare, and the employees are getting telehealth, family, and mental health services.
Preventive care, mental health care, telehealth, drugs, and family wellness programes.
Not quite. A cafeteria plan is a form of Section 125 offering, but Section 125 programs such as Elevate+ combine other wellness and reimbursement programs for more comprehensive benefits.
Yes, thanks to Section 125 deductions, employees are able to receive many benefits without affecting their taxable income.
Programs such as PCMP offer regular screenings, wellness dashboards, and telehealth access to detect issues early.
Telemedicine, mental health care, family coverage, life insurance, Mayo Clinic wellness resources, and others.
Yes, any company can institute these plans and integrate them fully with PCMP and SIMRP programs for full benefits.