Lower employer FICA payroll taxes with a Section 104 benefit plan
Employer FICA is usually treated as a fixed cost of having staff. It is not entirely fixed. A qualifying Section 104 indemnity plan, run alongside the benefits you already offer, lowers the payroll base that FICA is calculated on while giving employees more benefits and slightly more take-home pay.
How the plan works
Unlike our other categories, this is not an invoice audit. Employees enroll in a wellness and indemnity benefit structured under Section 104 of the tax code. Part of each paycheck is directed to the plan, which lowers the wages subject to employer FICA, and employees receive it back as benefits for completing a short monthly wellness step.
The plan carries a monthly per-employee fee. Any figure we show you is already net of that fee, so the number you see is the number your business keeps.
- Runs alongside existing health, benefits or wellness plans, or on its own if you offer none today
- Your current broker and health plan stay in place
- Employees gain benefits and see a small increase in take-home pay
- Plan administrators send employees monthly reminders for the wellness step
Who qualifies
Eligibility depends on headcount, not on how much you spend, which makes this a good fit for smaller employers who fall below the minimums of other categories.
- At least five full-time W-2 employees working 30 or more hours a week
- A U.S. employer, with or without a health plan today
- If payroll runs through a PEO (professional employer organization), the PEO client needs 100 or more employees
Section 104, not Section 105
Concerns people have heard about usually involve Section 105 reimbursement plans set up incorrectly. This program is a Section 104 indemnity plan, a different provision written into the tax code to encourage employers to fund better benefits.
This page is not tax or legal advice. We encourage your CPA and benefits advisor to review the plan, and the plan experts will answer their questions directly.
How the fee works
Like every savings category, the engagement is contingency-based: if there are no savings, there is no fee, and the fee is a share of the savings actually achieved.
Savings engagements are contracted with MECA LLC under the Schooley Mitchell brand. West Tennessee Consulting operates this site and introduces the engagement; it is a separate company.
Frequently asked questions
- Does this replace our current health plan or broker?
- No. It is added alongside whatever you offer today. Your broker relationship and the existing plan continue unchanged.
- What do employees have to do?
- Enroll, then complete a short wellness step each month. Administrators send reminders so it is not left to memory.
- What information do you need to check eligibility?
- Your number of full-time W-2 employees, whether payroll runs through a PEO, and whether you have a health plan today. A recent payroll summary is enough to start.