Implementing a Section 125 cafeteria plan can be a powerful way to reduce payroll tax burdens while giving your team access to more affordable healthcare. But the key to unlocking real savings and sustainable benefits lies in how you do it—and what you pair it with.

That’s where the Lumara Plan comes in. More than just a cafeteria plan, it’s a fully compliant, cost-free, and automated solution that includes a Section 125 cafeteria structure, but also integrates two powerful components: a Preventative Care Management Plan (PCMP) and a Self Insured Medical Reimbursement Plan (SIMRP).

The result? One of the most compliant, benefit-rich strategies available to employers and employees alike.

What Is a Section 125 Cafeteria Plan?

The definition of a Section 125 cafeteria plan is fairly straightforward: it’s a tax-advantaged benefits program that allows employees to pay for certain health-related expenses using pre-tax dollars. These expenses can include health plan premiums, dependent care, and out-of-pocket medical costs.

But the reality is that a traditional Section 125 cafeteria plan only goes so far. It doesn’t directly address rising claims, doesn’t help employees increase take-home pay, and doesn’t offer built-in preventative care support.

That’s why organizations looking for more than a basic cafeteria plan are turning to the Lumara Plan—a smarter way to build a compliant foundation while unlocking greater savings and wellness.

Why Traditional Cafeteria Plans Fall Short?

Before you roll out a Section 125 cafeteria plan, it’s critical to understand where traditional options fall short:

• No built-in care management
  
• No employee benefit enhancements
  
• Minimal engagement tools
  
• No claims cost control
  
• Zero impact on net paycheck

The Lumara Plan addresses all of these gaps by bundling in advanced features while still leveraging the core structure of Section 125.

Step-by-Step Tips for Implementing a Section 125 Cafeteria Plan the Right Way

• Start with the Right Structure

Don’t just implement a basic cafeteria plan—choose one that leverages Section 125 together with a fully managed PCMP and SIMRP. This is what transforms a standard tax play into a compliant, benefit-rich program.

The Lumara Plan does exactly that. It follows IRS guidelines while adding meaningful value for both your business and your employees.

• Educate Your Leadership Team

Before launching, ensure HR, Finance, and executive teams understand:

• The definition and purpose of a Section 125 cafeteria plan
  
• The add-on value provided by the PCMP and SIMRP components
  
• The net financial impact on payroll tax savings and employee paychecks
  

This ensures internal alignment and executive buy-in from the beginning.

• Automate Compliance and Administration

One major barrier to implementing these plans is administrative complexity. That’s why the Lumara Plan is designed to be:

• Hands-off for HR teams
  
• Fully automated
  
• Managed end-to-end by benefit experts
  

This reduces the risk of compliance errors and simplifies ongoing maintenance.

• Communicate Clearly with Employees

Employees need to know what’s in it for them. Communicate in plain language:

• Your paycheck is going up 3–4%
  
• You get $0 copay, Telehealth, wellness support, and mental health care
  
• You’re covered with a life, disability, and critical illness plan
  
• Spouses and dependents can benefit too
  

Transparency builds trust—and boosts enrollment.

• Roll Out Quickly (in Under 45 Days)

With Lumara, implementation takes just 30–45 days. That includes:

• Eligibility assessment
  
• Plan documentation
  
• Automated onboarding
  
• Employee education tools
  
• System integration
  

You don’t need to overhaul existing plans or change carriers. The Lumara Plan is designed to layer in effortlessly.

The Benefits of the Lumara Plan (vs. a Standalone Section 125 Plan)

For Employers:

• Save ~$600/year per W2 employee
  → That’s $60,000 for every 100 employees.
  
• Immediate bottom-line impact
  
• No out-of-pocket costs
  
• Reduced healthcare claims
  → ~$1,400 in claim savings over 3 years
  
• Boost retention and productivity
  
• Fully compliant, low-risk strategy
  

For Employees:

• 3–4% increase in net paycheck (approx. $100/month)
  
• $0 copay Telehealth, mental health, and wellness access
  
• Mayo Clinic health dashboard and tools
  
• Universal Life, Disability, and Critical Illness plan
  
• Spouse and dependent coverage included
  
• No change to the current healthcare plan or take-home pay
  

More than 40,000 employees are already enrolled in the Lumara Plan.

Why Choose Lumara?

Lumara was built around one simple idea: employees deserve better support, and employers deserve better margins.

Every year, businesses unknowingly waste thousands of dollars in payroll taxes—while their employees miss out on valuable, tax-free health benefits. The Lumara Plan helps fix that.

Here’s why organizations choose Lumara:

• It’s hands-off for HR
  
• There’s no out-of-pocket cost
  
• It doesn’t require benefit changes
  
• It provides real tax savings and better access to care
  

And best of all—it helps build stronger teams, promote loyalty through benefits, and create family-first workplaces without adding to your budget.

FAQs About Implementing a Section 125 Cafeteria Plan

What’s the difference between a traditional Section 125 plan and the Lumara Plan?

A traditional cafeteria plan focuses only on pre-tax savings. The Lumara Plan builds on that foundation by integrating PCMP and SIMRP to create a more powerful, compliant, and benefit-rich strategy.

Will this impact our current benefits?

No. The Lumara Plan works alongside existing coverage—it doesn’t require a carrier change or redesign of your health plan.

How soon can we launch?

Most clients are up and running in 30–45 days from initial engagement.

Is it really no cost?

Yes. The plan is structured so there are no employer out-of-pocket expenses.

Ready to Future-Proof Your Benefits?

You don’t need to spend more to give your team better benefits. You just need the right strategy.

The Lumara Plan is the smarter, fully managed solution for companies that want to maximize tax savings, minimize admin burden, and elevate employee care.

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