Employee Health Benefits & Section 125 FAQ

Answers to the most common employer questions about Section 125 Cafeteria Plans, free employee healthcare, FICA tax savings, IRS compliance, and implementation timelines.

Frequently Asked Questions

Is Summit Health Benefits really free for employers?

The core Section 125 Cafeteria Plan is 100% free for employers — $0 setup fees, $0 monthly costs, $0 hidden charges. The plan is funded by FICA payroll tax savings of 7.65% generated when employee benefit elections reduce taxable wages. Those savings cover the cost of healthcare benefits.

Is Summit Health Benefits legal and IRS-approved?

Yes. Summit Health Benefits operates under IRS Section 125 Cafeteria Plan regulations, which have been part of the tax code since 1978. The program is fully compliant with IRS guidelines, HIPAA, and ACA requirements. All compliance documentation and plan administration is handled for you.

What is included in the free Section 125 plan?

The free plan includes 24/7 telemedicine, $0 virtual primary care visits, free generic medications (93% coverage), preventive and primary care, dental and vision benefits, lab and imaging discounts up to 75%, crisis tele-counseling, and specialist messaging.

Does the Section 125 plan cover hospitalization and ER visits?

The free Cafeteria Plan covers approximately 90% of typical healthcare needs. For complete coverage including hospitalization and ER visits, the optional Premium Plan adds HealthShare coverage for approximately $125 per employee per month.

Do employees pay anything out of pocket?

Employees pay no premiums for the free Cafeteria Plan. Benefits are funded through pre-tax payroll contributions that actually increase take-home pay by reducing FICA liability. For in-person visits, employees pay significantly reduced rates through Summit's provider network.

Does Section 125 replace existing health insurance?

Section 125 can serve as a standalone health solution or supplement existing insurance. Many employers use it alongside traditional insurance to reduce employee out-of-pocket costs. Others use it as primary coverage for employees who previously had none.

How quickly can we implement a Section 125 plan?

Most employers are live within 10 to 14 business days. Summit Health Benefits handles all paperwork, IRS compliance documentation, employee enrollment, and payroll integration. A dedicated account manager guides you through every step.

How much do employers save on taxes with Section 125?

Employers save 7.65% in FICA taxes on each pre-tax benefit dollar. For an employee electing $250 per month in pre-tax benefits, the employer saves $19.13 per month in FICA. Across 50 employees, that is approximately $11,475 per year in tax savings.

Is there a minimum number of employees required?

Section 125 Cafeteria Plans require a minimum of 5 W-2 employees. For businesses with fewer than 5 employees, Summit Health Benefits offers WoW Health Plans — affordable membership-based coverage for small teams, sole proprietors, and subcontractors.

Who administers the Section 125 plan?

Summit Health Benefits handles all plan administration, IRS compliance documentation, nondiscrimination testing support, and ongoing employee support. Employers do not need to hire additional HR staff or become benefits compliance experts.

Can employees with pre-existing conditions enroll?

Yes. Pre-existing conditions are covered under the Summit Health Benefits plan. Coverage is not conditional on employees' health history.

How do employees access their Section 125 benefits?

Employees receive a benefits card and access to a member portal and mobile app. They can schedule virtual appointments 24/7, message providers, order medications for home delivery, and find in-network providers for in-person care.

What happens if we need to cancel the plan?

There are no long-term contracts or cancellation penalties. Employers can adjust or discontinue the plan at any time according to business needs.

How is Section 125 different from traditional health insurance?

Traditional insurance is funded by direct employer and employee premium payments. Section 125 is funded by FICA tax savings generated automatically through pre-tax payroll elections — reducing costs for both parties without requiring direct premium outlay from the employer.

Still Have Questions?

Schedule a free 10-minute consultation with a Summit Health Benefits expert. We will walk you through how Section 125 works for your specific payroll and employee situation — no commitment required.