Section 125 (Cafeteria) Plans
Tax-Smart Benefits for Employers and Employees
A Section 125 plan, also called a cafeteria plan, allows employees to pay certain insurance premiums or qualified expenses using pre-tax dollars. Employers benefit from reduced payroll taxes, while employees enjoy higher take-home pay—making it a win-win for both parties.
Aurora National Insurance helps Alaska businesses design, document, and administer compliant Section 125 plans that integrate seamlessly with group health, dental, and vision benefits.
How Section 125 Plans Work
Employees elect to redirect a portion of their salary into approved benefits such as:
- Health, dental, and vision insurance premiums
- Flexible Spending Accounts (FSAs)
- Dependent care or adoption assistance
- Certain supplemental coverage options
Because contributions are deducted before taxes, both employer and employee save on FICA, FUTA, and state payroll taxes.
Compliance and Plan Administration
Section 125 plans must follow IRS regulations, including written plan documents, nondiscrimination testing, and annual elections. Aurora National Insurance partners with trusted third-party administrators to ensure your plan stays compliant and efficient.
Benefits to Your Organization
- Tax Savings: Reduce payroll tax liability by up to 7.65%.
- Employee Satisfaction: Offer valuable tax-advantaged benefits.
- Compliance Confidence: Ensure all documentation meets federal requirements.
Empower your team to maximize their benefits while lowering costs for your business. Contact Aurora National Insurance to establish a Section 125 plan today.
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