Many employers turn to Section 125 cafeteria plan rules to offer tax-saving benefits to their employees and for their own benefits as well. The most common version is the Premium-Only Plan (POP), which allows employees to pay for certain benefits using pre-tax income.
Though this approach can result in some tax deferral, basic plans usually are not deep and leave employers and employees with little total value. Most often, the specifics are not well understood, and the promise is not being utilized.
In this blog, we’ll walk through what a Premium-Only Plan includes, how Section 125 cafeteria plan rules work, and why enhanced benefit structures can deliver more meaningful impact.
What Is a Section 125 Plan?
A Section 125 cafeteria plan is a tax-saving tool. It lets employees use pre-tax income to pay for certain benefits, mostly insurance premiums. This lowers the employee’s taxable income and reduces the employer’s payroll taxes too.
However, most businesses only offer the Premium-Only Plan version. It gives some savings but does not help with actual health needs or long-term financial benefits.
Why is the Lumara Plan Different?
The Lumara Plan includes Section 125, but it goes much further. This fully managed health benefits solution adds structure, services, and real value. It combines the following plans:
- Preventative Care Management Plan (PCMP): This part focuses on early health checkups, lifestyle coaching, and wellness monitoring. The goal is to help people stay healthy and catch issues before they become serious.
- Specialized Insurance Medical Reimbursement Plan (SIMRP): This plan covers eligible out-of-pocket medical expenses using a managed reimbursement system. It follows IRS and DOL rules strictly and helps employees access more coverage at no extra cost.
By including PCMP and SIMRP, the Lumara Plan becomes a powerful tool for improving health, saving money, and supporting both the employer and the employee.
Benefits for Employers
When employers offer the Lumara Plan, they start seeing real benefits right away. The plan is designed to save money, improve employee health, and make the overall experience easier for everyone. Here’s what you can expect:
- You can save about $600 every year for each W2 employee on your payroll.
- Your overall healthcare costs can go down by 5 to 10 percent, which adds up to big savings over time.
- There is no cost for you as the employer to set up or offer the plan.
- You may see a drop in employee healthcare claims by around $1,400 per person over three years.
- The plan is easy to roll out and can be up and running in just 30 to 45 days.
- When employees feel supported, they tend to stay longer and perform better at work.
- With lower costs and healthier employees, your business can see real improvements in its financial performance.
Benefits for Employees
For employees, the Lumara Plan provides real support that actually makes a difference in their everyday lives. It’s not just another benefit on paper; it’s something they can see, use, and feel good about. Here’s what they get:
- Employees can take home about $100 more every month, which adds up quickly.
- They get 24/7 access to Telemedicine and Virtual Care, and there are no copays at all.
- Spouses and dependents are also fully covered, again with no copays.
- Employees can access mental health support and counseling through the Employee Assistance Program (EAP).
- There is also support for couples counseling and addiction recovery, which can be a big help during tough times.
- Employees can use Mayo Clinic programs and track their wellness through a personal health dashboard.
- The plan includes a Health Vitals Facial Scan Tool, which helps keep an eye on basic health signs.
- There are easy-to-follow diet and stress programs to support overall wellness.
How Does It Work?
Here’s a simple step-by-step of how the Lumara Plan works:
- Consultation: Our team understands your business and workforce.
- Custom Plan Setup: We tailor the plan using Section 125 rules, PCMP, and SIMRP.
- Employee Enrollment: Fast, digital, and supported every step of the way.
- Ongoing Support: We manage compliance, claims, and reporting, so you don’t have to.
And yes, everything is IRS and DOL-compliant. That’s a key reason why businesses trust Lumara Health.
Why Does Lumara Plan Matter?
Most benefit plans feel the same. But the Lumara Plan is different because it is designed to:
- Save money
- Improve health
- Support retention
- Deliver immediate results
It does all of this while leveraging Section 125 cafeteria plan rules, a structure you may already be familiar with, but transforming it into something much more powerful.
Conclusion: All About The Section 125 Premium-Only Plan
If you are an employer looking to offer stronger support to your team without increasing costs or facing compliance concerns, this plan may be an ideal solution. It goes beyond a standard Section 125 plan by combining tax advantages with meaningful health benefits.
Employees can access valuable services that promote better health and well-being, while employers benefit from cost savings along with improved workforce performance. It has a straightforward setup and clear value for both sides, this approach helps businesses create a more supportive and efficient workplace. It is a smart step toward long-term employee satisfaction and organizational growth.
Get to Know More About Section-125 Premium-Only Plan
It only takes a few minutes to see if this plan is right for your team. Book a quick 10-minute consultation, get a free proposal, or speak with a benefits expert today. Take the next step toward better employee benefits.