Today more than ever, employers face escalating business expenses and increasing tax burdens. At the same time, employees want more benefit choices and the freedom to decide which benefits best meet their needs. 

While voluntary benefits provide one solution, many employers are looking for additional ways to ease the financial burden of benefit costs while meeting employee benefit needs. A possible solution? A Section 125 plan. 

Under a Section 125 plan, employees can pay for some current after-tax expenditures, such as medical insurance, disability income, dependent care costs, and some medical expenses not covered by insurance with pre-tax dollars. For employees, this reduces their tax obligation, which in turn increases their spendable income. And, since employees select only those benefits they need, they’re not paying for benefits they don’t use.

A Section 125 plan benefits employers as well, by reducing various payroll-related employment taxes, which in turn reduces payroll costs. What’s more, employers benefit from offering their employees an enhanced benefit program—at little to no additional cost.

American Fidelity Assurance Company can assist with the administrative services employers need to take advantage of Section 125 plans - while easing many of the hassles associated with implementing and maintaining these types of plans due to strict IRS and ERISA regulations..

At American Fidelity, it is important that the plans you provide are in compliance with state and federal regulations. American Fidelity's Section 125 Administrative Services include:

• Providing a sample plan document for review by your client’s legal counsel
• Explaining the plan to employees in group meetings*
• Reviewing benefit choices with each employee and assisting him or her with enrollment*
• Providing payroll staff with correct employee enrollment information—ensuring that your client’s plan gets off the ground correctly and quickly*