Maryland Section 125 Plan Guide for Employers (2026)
Maryland employers compete in a dense, high‑cost regional market. A Section 125 plan reduces payroll taxes and improves employee take‑home pay without changing your carrier.
CMS reports 248,770 Marketplace plan selections in Maryland during the 2026 open enrollment period, a strong indicator that employees are actively comparing employer coverage with individual options.
Maryland Coverage Context
Maryland operates a state‑based Marketplace and has expanded Medicaid. That makes affordability a key differentiator for employers, especially for hourly and entry‑level roles.
Maryland Employer Strategy Options
| Strategy | Strength | Best Fit |
|---|---|---|
| Traditional group plan | Stability | Full‑time teams |
| Fixed employer contribution | Budget control | Multi‑location employers |
| Group plan + Section 125 | Net‑pay lift | Price‑sensitive teams |
Maryland Cost Drivers You Can Control
- Employer contribution level
- Plan design
- Participation rate
- Pre‑tax vs after‑tax deductions
Section 125 directly impacts payroll taxes, making it one of the fastest ROI levers.
Maryland Implementation Steps
- Eligibility rules
- Payroll deduction setup
- Plan document creation
- Election collection
- Employee education
Summit Health Benefits manages compliance and rollout as your advisor/administrator. Start with the Section 125 overview.
Maryland Paycheck Example (Illustrative)
| Example | After‑tax | Pre‑tax |
|---|---|---|
| Employee contribution | Taxed wages | Pre‑tax wages |
| Employer payroll tax cost | Higher | Lower |
| Employee net pay | Lower | Higher |
Maryland Employee Communication Tips
- Explain why taxable wages may be lower.
- Provide a paystub example during enrollment.
- Share official W‑2 guidance early.
Helpful links:
Maryland FAQs
Do we need a plan document?
Yes. Section 125 requires a written plan document.
Can we keep our carrier?
Yes. Section 125 works with your existing plan.
Is this only for large employers?
No. Small employers often see strong payroll tax ROI.
Next Step for Maryland Employers
- Estimate savings with the Summit Health Benefits calculator
- Explore plan support at Summit Health Benefits
Sources
- CMS 2026 Marketplace plan selections by state (Maryland platform and enrollment): https://www.cms.gov/newsroom/fact-sheets/marketplace-2026-open-enrollment-period-report-national-snapshot-2
- CMS state-based exchange list (Maryland SBE): https://www.cms.gov/cciio/resources/fact-sheets-and-faqs/state-marketplaces
- Medicaid expansion status by state: https://www.kff.org/medicaid/issue-brief/status-of-state-medicaid-expansion-decisions-interactive-map/