Cafeteria Plan Section 125 Overview A Section 125 Plan is a simple, affordable way to save money on employee benefits. Employer – Provides a means for a company to take advantage of current tax laws, offer enhanced benefit options, and receive a FICA tax savings for all benefits selected by employees under the Plan. Employee – Using a tax incentive program allows employees to have more choice among benefits, as well as pay for group health premiums, other qualified insurance premiums, unreimbursed medical costs and child and dependent care costs on a pre-tax basis, thereby saving Federal and FICA tax on all benefits.
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