Section 125 Cafeteria Plans

Sana plans are set up as Section 125 Cafeteria Plans. These plans offer many benefits for employers and employees, but also come with certain compliance requirements and setup considerations. Learn more!

What is a Section 125 Plan?

A Section 125 plan, also known as a Cafeteria Plan, provides participants an opportunity to receive certain benefits on a pre-tax basis.  

Our partners at Mineral (formerly ThinkHR) explain, “A cafeteria plan allows an employee to pay for certain benefits from gross pay, before federal income taxes, Social Security taxes, and, in most instances, state income taxes, are deducted. Employees save by reducing these payroll taxes. The employer saves because amounts paid through a cafeteria plan reduce the salary base used to calculate employment taxes.”

To ensure all Section 125 plans are IRS compliant, employers must have the following on file:

  • Section 125 plan document providing information on which plans are available, rules for eligibility, and other required items outlined by the Employee Retirement Income Security Act (ERISA).  
  • Summary Plan Description (SPD) outlining what the plan provides and how it operates, including information on when an employee can begin to participate in the plan and how to file a claim for benefits. SPDs are automatically created for each employer and are available for members to view and download in the document center of their Sana account. 

If your company elects for Sana to complete their Section 125 documentation during the implementation process, we will create a Premium Only Plan (POP), a specific type of cafeteria plan that allows employees to pay for their portion of medical, dental, and vision premiums with pre-tax dollars.

If you have any questions, you can reach your Customer Success Manager Monday through Friday during normal business hours.