Keep your best caregivers.
Save on payroll taxes.
Build a stronger team.
A paycheck boost that costs your caregivers nothing extra in benefits and costs you nothing in salary. Just smarter pre-tax structuring. Section 125 plans reduce your FICA burden while caregivers take home more.
The numbers that actually matter
Not marketing numbers. These are the parts of the tax code that do the work for your franchise.
Employer-side FICA
The rate your franchise stops paying on every dollar a caregiver runs through a Section 125 plan.
Established tax code
Section 125 has been part of the IRS code for more than four decades. Not a loophole — it is how benefits are meant to be run.
Different wrapper
If your caregivers already pay for health insurance, the coverage does not change. The setup is structural — how the deductions are classified.
Caregiver turnover is hammering your margins
Training costs pile up. Client continuity suffers. Shifts go unfilled. And caregivers leave for a few dollars more elsewhere. On top of all of that, every paycheck is paying FICA on dollars that did not have to be FICA-taxed in the first place.
✕ Without Section 125
- Caregivers pay health premiums with after-tax dollars—every paycheck feels smaller
- You pay FICA (7.65%) and employees pay FICA (7.65%) on those amounts
- For 40 caregivers, that's $18,000+/year in preventable payroll taxes you're absorbing
✓ With Section 125
- Caregivers pay health premiums with pre-tax dollars—they take home more each month
- Neither party pays FICA on those deductions—savings for everyone
- Same health coverage, same benefits, structured to reduce taxes and boost morale
Quick Example: 40 Caregivers
Average salary of $35,000 with $4,000 in annual pre-tax deductions per caregiver at 80% participation:
Estimated employer savings/yr
Estimated caregiver savings/yr
Estimated total tax savings/yr
Based on 7.65% FICA rate. Actual results vary by salary, participation, and plan design.
Section 125: Give Caregivers a Paycheck Boost Without Raising Salary
It's legal, it's in the tax code, and it works. Here's what it does for your franchise.
Retention & Recruitment
Keep good caregivers by giving them a real paycheck boost. Word spreads, and you attract stronger candidates without increasing salary costs.
Reduce Your FICA Burden
Save 7.65% on every pre-tax dollar deducted. For 40 caregivers, that's thousands annually you can reinvest in the business.
Caregiver Satisfaction
More take-home pay makes caregivers feel valued. Lower turnover means better client continuity and fewer costly replacements.
Zero Admin Hassle
We handle compliance, nondiscrimination testing, and IRS requirements. You focus on serving senior care clients while we manage the plan.
See Your Savings in 30 Seconds
Our free FICA Savings Calculator estimates what your franchise could save with a Section 125 plan. Enter your caregiver count and average salary, we do the math.
Open the CalculatorSample estimate. Your results will vary.
Learn More
What Is a Section 125 Plan?
The complete guide to how cafeteria plans work, who qualifies, and what benefits can be included.
Read the Guide
FICA Savings for Employers
A breakdown of how payroll tax savings work, with real numbers for businesses of different sizes.
Learn More
Pre-Tax vs. Post-Tax Benefits
Understand the difference and why it matters for your bottom line and your caregivers' paychecks.
Learn More
Senior care franchise FAQ
Plain-English answers to the questions franchise owners raise about caregiver benefits.
Can senior care franchise owners offer pre-tax benefits to caregivers?
Yes. A Section 125 plan covers both full-time and part-time caregivers once eligibility rules in the plan document are met. Typical eligibility for senior care is 90 days of employment at 20–30 hours per week, but the thresholds are set by the franchise owner to match the workforce.
How does Section 125 help with caregiver turnover?
Pre-tax benefits directly increase take-home pay for caregivers — often by $40–$80 per paycheck depending on the deductions elected. For an industry where turnover is driven largely by wages and competing offers, a visible increase in net pay is one of the cheapest retention levers available to a franchise owner.
Does Section 125 work for 1099 caregivers or only W-2 employees?
Section 125 pre-tax treatment applies only to W-2 employees. 1099 independent contractors cannot participate in a Section 125 plan because the plan is a payroll deduction structure. Most senior care franchises classify caregivers as W-2 employees, which makes them eligible.
Do I need a separate Section 125 plan for each franchise location?
Each legal entity (each EIN) generally needs its own plan document. Many franchise owners operate multiple locations under separate EINs for liability reasons. The plan design can be standardized across all of them so operations stay uniform even if the underlying documents are separate.
How quickly can a senior care franchise start seeing FICA savings?
FICA savings begin on the first payroll run after the Section 125 plan is effective and eligible employees are enrolled. The practical timeline from initial conversation to first payroll depends on payroll-system setup and enrollment communication — typically a few weeks when payroll and carrier line up.
Ready to see what this looks like for your franchise?
David Toves is a licensed benefits professional who specializes in Section 125 for franchise operators. A 15-minute call to walk through your caregiver headcount, current benefits, and what a plan would look like. No sales pitch.
Talk to DavidEducational Content Only: The information provided on benefitsgenius.co is for educational and informational purposes only. It does not constitute insurance, tax, legal, or financial advice. Consult with qualified professionals regarding your specific situation.
Savings Estimates: All savings figures are illustrative and based on general FICA tax rates (7.65%) and assumptions. Actual savings vary based on your organization's size, payroll structure, employee participation rates, plan design, and applicable state/federal regulations. Consult your tax advisor for projections specific to your situation.
Ready to see how much your company could save?
Connect with David Toves for a free, no-obligation consultation — or ask Sarah a quick question anytime.
