Section 125 Tax Benefits

A win-win for you business! More Benefits, Less Cost

How Liberty National’s Cafeteria Plan Works

♦ Section 125 Cafeteria Plans help you find and retain better quality employees.  By offering your employees voluntary benefits, you help them gain access to supplemental insurance benefits they need or want individually or for their families.  Section 125 Cafeteria Plans help your employees:

♦ Save money by purchasing certain supplemental insurance benefits pretax, conveniently through payroll deduction
Perform better because they have access to voluntary benefits.

♦ A happy staff delivers a stronger performance and better morale for business owners.  Employers also save money when they provide a Section 125 Cafeteria Plan.

♦ Section 125 is an IRS code that provides tax savings on Cafeteria Plan benefits. A Cafeteria Plan is an employer-provided benefits program in which an employee uses pretax dollars to pay for qualified expenses, such as life and supplemental health insurance premiums.

♦ With Liberty National’s Worksite Advantage Section 125 Cafeteria Plan, the employer facilitates insurance payment by deducting the premium from the employee’s paycheck before taxes are withheld on eligible pretax products.

♦ Pretax deduction provides the benefit of reducing an employee’s taxable gross income. Lower taxable income for employees means employers spend less on contributions toward federal unemployment, Social Security, workers’ compensation, and applicable states taxes.

Is There a Fee to Enroll My Business in LNL’s Worksite Advantage?

No. Liberty National’s Worksite Advantage is self-administered, so there are no setup or administrative fees.

Quick Guide to Worksite Section 125

Section 125 Tax Benefits

One simple adjustment in your company’s payroll process could save your business thousands of dollars!

With Liberty National’s Section 125 Cafeteria Plan, you can change payroll deduction for employee premium payment from an after-tax to a pretax basis on eligible products.

The chart shows an example of how Section 125 lowers employees’ taxable income.

Tax savings are for illustration purposes only. Actual savings vary from employee to employee.

What does this mean for your business?

With lower taxable employee gross income, your business spends less on contributions toward Social Security, workers’ compensation, and unemployment insurance taxes. Each time an employee participates in the Plan, your overall taxable payroll contribution decreases.

The chart below shows an example of estimated annual tax savings based on the number of enrolled employees and monthly premium.

 

Employer Tax Savings Average Monthly Redirected Premiums Per Employee

Employer Tax Savings by LNL’s Cafeteria Plan

Example based on combined Social Security (FICA) and federal unemployment (FUTA) taxes of 10%. Additional state and local taxes may apply in some states, which could affect overall tax savings.

In this example of reduced taxable employee income, your company would spend less Social Security and save about $10 for every $100 of employee contributions.

Individual & Family

Liberty National offers life insurance and Supplemental health & accident insurance for individuals and families, as well as several introductory offers.

Group Employee

Keep your business attractive to skilled workers by helping employees gain access to pretax products, while still reducing your business’ taxable contributions.

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A Reputation that stands

  • For 40 consecutive years, Liberty National has earned the A+ (Superior) Financial Strength Rating from A.M. Best Company (as of 7/18).
  • AA- or “Very Strong” Financial Strength Rating from Standard & Poor’s (as of 11/18)
  • A1 for Insurer Financial Strength Rating from Moody’s (as of 9/18)
  • A+ “Strong” for Insurer Financial Strength Rating from Fitch (as of 11/18)
  • Ward’s Top 50 Life-Health List (as of 6/17)