In this example, the employer saves by having a flexible benefits plan where employees can redirect expenses for their employer sponsored health insurance premiums, child or elder care, and other medical expenses not covered by their insurance.
Employer Savings
(Based on 50 employees, average $2,000 per month salary)
| | Payroll Costs without 125 Plan | Payroll Costs with 125 Plan |
| EE Salary | $2,000 | $2,000 |
| EE 125 Plan Contribution | 0 | 300 |
| Taxable Salary | 2,000 | 1,700 |
| FICA at 7.65% | 153 | 130 |
| Worker's Comp. (Est. 5%) | 100 | 85 |
| Total Per EE Payroll | 2,253 | 2,215 |
| Monthly Per Employee Savings | | 38 |
| Annual Per Employee Savings | | 456 |
| | | |
| EMPLOYER SAVINGS THE FIRST YEAR | | $22,800 |
Employee Savings
| | Without Premium Only | With Premium Only |
| | | |
| GROSS SALARY | $2,000.00 | $2,000.00 |
| Less Medical Premium | 0 | 100.00 |
| | | |
| TAXABLE INCOME | $2,000.00 | $1,900.00 |
| Federal Taxes | 403.00 | 372.53 |
| State Taxes* | 113.00 | 104.01 |
| State Disability* | 15.87 | 15.07 |
| Social Security | 122.97 | 116.77 |
| Medicare | 28.76 | 27.31 |
| Less Medical Premium | 100.00 | 0 |
| | | |
| SPENDABLE INCOME | $1,216.40 | $1,264.31 |