With BMIFlex, we can administer your Flexible Spending Account/Cafeteria plan either standalone or in conjunction with your partially self-funded plan.
Employee Savings Guide
A Section 125 plan allows employees to use pre-tax income to pay for specified group insurance premiums. Taxable income is reduced by the amount the employee contributes to his or her insurance premiums. This means lower state, federal and FICA taxes. Therefore, employees pay less tax and have more take home pay.
| Employee Tax Savings, General Example |
|
Without 125 Plan |
With 125 Plan |
| Annual Salary |
$25,000 |
$25,000 |
| Annual Employee Pre-Tax Premium Contributions |
$0 |
($1,800) |
| Taxable Income |
$25,000 |
$23,200 |
| Estimated Taxes (30% tax rate) |
($7,500.00) |
($6,960) |
| After-Tax Premium Contributions |
($1,800.00) |
$0 |
| Net Take-Home Pay |
$15,700.00 |
$16,240.00 |
| Increase in Employee Take-Home Pay |
$540 |
| Employer Tax Savings, General Example |
|
Without 125 Plan |
With 125 Plan |
| Annual Payroll |
$375,000 |
$375,000 |
| Annual Employee Pre-Tax Premium Contributions |
$0 |
($27,000) |
| Taxable Payroll |
$375,000 |
$348,200 |
| Total Payroll Taxes (FICA Tax @ 7.65%) |
$28,688.00 |
$26,662 |
| Employer Payroll Tax Savings |
$2,066 |
