Section 125 Plan for Assisted Living Facilities: The 2026 Employer Guide

• Personal care workers in assisted living facilities for the elderly earned an average $16.87 per hour ($35,090 per year), per the Bureau of Labor Statistics Occupational Employment and Wage Statistics, industry-specific data for NAICS 623312, May 2025 release.
• Assisted living communities are licensed and inspected by state health departments or aging agencies, not certified by the federal Centers for Medicare and Medicaid Services the way nursing homes are, according to the Congressional Research Service.
• Registered nurses, dining services staff, and certified nursing assistants in senior living communities turned over at 40.8%, 40.0%, and 39.0% respectively in 2026, according to Ziegler's 2026 State of the Senior Living and Care Workforce survey.
• Roughly 32% of Brookdale Senior Living's 33,000 employees were part-time as of its most recent annual filing (22,440 full-time, 10,560 part-time), illustrating how common part-time and PRN staffing is across the industry.
• A disclosed hypothetical 600-employee national or REIT-affiliated portfolio generates approximately $82,620 per year in employer FICA recapture at typical election levels.

A caregiver earning $35,090 a year at an assisted living community outside Scottsdale, Arizona keeps an extra $28.80 a month the day her employer turns on a Section 125 plan, for coverage she already paid for after tax. A few states away, an executive director who runs a 25-bed memory care wing has spent years assuming that a workforce split across three rotating shifts and a roster of PRN callouts makes pre-tax benefits too complicated to administer, and that assumption is the single biggest reason the industry leaves employer FICA recapture on the table. National operators like Brookdale Senior Living, with more than 650 communities in 41 states, and Atria Senior Living, with 340 communities across 44 states, compete for the same caregivers this Scottsdale community is trying to keep. The full benefit stack every Benecor plan participant receives is in the table below.

How much does a Section 125 plan save an assisted living caregiver?

An assisted living community's W-2 payroll typically splits into caregivers and med techs working three rotating shifts, dining and housekeeping staff, an activities coordinator, and an executive director or administrator, most paid an hourly wage with shift differentials for evening and overnight coverage. Consider a caregiver working outside Scottsdale, Arizona, a market where retiree population growth has pulled in national operators like Brookdale and regional operators competing for the same limited caregiver pool. This caregiver earns $35,090 per year, the May 2025 Bureau of Labor Statistics average for personal care workers in the assisted living facilities industry (NAICS 623312). Arizona levies a flat 2.5% state income tax as of tax year 2026, per the Arizona Department of Revenue, so this employee's paycheck runs three layers, federal income tax, Arizona state tax, and FICA.

This caregiver keeps an extra $28.80 a month for identical coverage, simply because it moves through payroll pre-tax instead of post-tax. The community recaptures $130 x 12 x 7.65% = $119.34 per year in employer FICA on this single employee, calculated only on the flat election amount regardless of which shift the caregiver works or how much shift-differential pay is layered on top of base wages.

"I kept picturing three separate benefit plans for three separate shifts. It's one plan. The FICA savings alone covers most of what we spend replacing a caregiver who leaves in her first ninety days."

Does state licensing change how a Section 125 plan works for assisted living?

No. Section 125 is a federal tax provision that applies identically no matter which state licenses the community, but the fact that assisted living has no single federal regulatory definition is worth understanding before enrollment begins. Each of the 50 states independently defines assisted living through its own licensing law, and the resulting staffing ratios, training hours, and resident acuity limits vary substantially from state to state, according to the Congressional Research Service. A community's state licensing agency, typically a state health department or department of aging, conducts inspections and enforces care standards on a completely separate track from the IRS rules governing whether a caregiver's benefit election is pre-tax or post-tax. Review the full §125 implementation and compliance flow→ that applies to any employer regardless of state licensing category.

Why assisted living isn't regulated like a nursing home

The distinction matters because Benecor's home care and nursing guide covers a workforce operating under a meaningfully different federal framework. Nursing homes are certified and surveyed under the Conditions of Participation established by Title XVIII and Title XIX of the Social Security Act and enforced by the Centers for Medicare and Medicaid Services. Assisted living communities generally are not, because most assisted living services are not directly reimbursed by Medicare, so CMS does not run the same routine certification surveys it runs for skilled nursing facilities, according to the Congressional Research Service and a U.S. Department of Health and Human Services Office of Inspector General report. Where CMS does apply to assisted living is through state Medicaid waiver programs, which carry their own federal conditions layered on top of state licensing. Compare the Medicare-certified home care and nursing track in Benecor's companion guide→ for the contrast.

How does 24/7 shift staffing affect Section 125 eligibility?

A community running three shifts and a PRN callout list does not need three separate benefit designs. Section 125 eligibility is a plan-document decision the community controls, not a rule tied to which shift a caregiver works, and the same election amount and enrollment process apply whether a caregiver clocks in at 7 a.m., 3 p.m., or 11 p.m. The plan document sets the hours-worked or classification threshold that determines who can enroll, and a well-drafted document lets an executive director extend the same benefit menu across every shift without administering separate programs for day, evening, and overnight staff.

How PRN and part-time caregivers fit into a Section 125 plan

PRN, or as-needed, staffing is common in assisted living, and part-time hours make up a meaningful share of most communities' payroll. Brookdale Senior Living, the largest publicly traded operator, reported 22,440 full-time and 10,560 part-time employees among its roughly 33,000 total workforce as of its most recent annual filing, a part-time share of about 32%. A community's plan document can extend Section 125 eligibility to part-time and PRN staff who meet a defined hours threshold, or restrict eligibility to full-time employees only, and that design choice should be made deliberately rather than defaulted, since it directly determines how much of the community's total payroll generates FICA recapture. See how eligibility design interacts with nondiscrimination testing→ before finalizing the plan document.

What assisted living staff actually get

A caregiver finishing a double shift, or a med tech who spent a Tuesday afternoon managing a resident fall, rarely has post-tax budget left over for a routine doctor's visit, and losing a weekday to an appointment often means trading a shift with a coworker who is already stretched thin. Caregivers, med techs, dining staff, and administrators who join a Benecor plan get real care without needing to give up a shift to use it. Review how the same benefit stack works across every industry on the Section 125 hub→.

• $0 Virtual Urgent Care, 24/7: A caregiver who strains a shoulder helping a resident transfer at 2 a.m. reaches a licensed clinician without waiting for a day shift to start.
• $0 Virtual Primary Care: Routine visits and prescription renewals without needing to trade a shift with a coworker.
• $0 Mental Health Counseling: Caregiving work carries real emotional weight, especially in memory care, and zero-cost virtual counseling is one of the highest-used benefits at the assisted living communities Benecor works with.
• 800+ commonly prescribed medications at $0, fully covered: Maintenance medications with no out-of-pocket cost from the first payroll cycle, useful for a workforce that often skips its own care while caring for others.
• Procedures at 57% savings, specialist visits at 35% off, lab tests at 60% off, imaging at 75% off: When a caregiver needs in-person care after an on-the-job strain, the network discounts mean the visit actually happens.
• Dental, vision, and family coverage with 350,000+ doctors nationwide: Coverage that stays active whether a caregiver is on the day shift this month or rotates to nights next month.

Section 125 for assisted living, from one community to a multi-site portfolio

Single-community operators

A typical 25-employee single-community operator, an executive director, a handful of med techs, caregivers across three shifts, dining staff, and an administrator, at an average election of $130 per month generates approximately $2,984 per year in employer FICA recapture. An owner who structures the community as a sole proprietorship or single-member LLC is not a W-2 employee and does not participate in the plan personally, but every caregiver and staff member on payroll is eligible regardless of the owner's own structure. Review the full §125 implementation and compliance flow→ for any employer size.

Regional multi-community operators

A 150-employee regional operator, running several communities across a metro area or a state with a mix of full-time, part-time, and PRN caregivers, generates approximately $19,278 per year in employer FICA recapture at an average $140 monthly election. At this size, eligibility rules need to apply consistently across every community in the portfolio, since a caregiver's classification as full-time, part-time, or PRN should not depend on which specific community she is scheduled at.

National and REIT-affiliated portfolios

A disclosed hypothetical 600-employee national or REIT-affiliated portfolio, the scale at which operators such as Brookdale Senior Living, Atria Senior Living, and Sunrise Senior Living compete, generates approximately $82,620 per year in employer FICA recapture at an average $150 monthly election. This figure is a disclosed hypothetical scenario, not a claim about any named company's actual headcount or plan design. Brookdale operates more than 650 communities in 41 states, Atria operates 340 communities across 44 states, and Sunrise Senior Living operates more than 240 independent living, assisted living, and memory care communities across the United States and Canada, illustrating how the industry scales through management companies overseeing many individually licensed communities rather than one centrally employed workforce. Each community is typically licensed and staffed separately even under a shared management company, so plan design should account for community-level headcount and eligibility even within a national portfolio.

Does Section 125 help with assisted living's turnover crisis?

A Section 125 plan does not change base pay, but it can help retention economics in an industry where turnover runs among the highest of any sector. Registered nurses, dining services staff, and certified nursing assistants in senior living communities turned over at 40.8%, 40.0%, and 39.0% respectively, according to Ziegler's 2026 State of the Senior Living and Care Workforce survey. Replacing a caregiver means recruiting, weeks of training on resident-specific care plans, and thinner coverage on every shift while the position sits open, costs that stack up fast in an industry already competing for the same limited caregiver pool across every operator in a metro area. A benefit a caregiver can enroll in during orientation, on her own phone, rather than waiting months for the next annual window, is one more reason she stays through the difficult first ninety days on the floor. Home care agencies face a similar elder-care retention challenge→, though under a Medicare-certified compliance track rather than state-only licensing.

Compliance for assisted living operators

Nondiscrimination testing with a PRN-heavy roster

Section 125 nondiscrimination testing runs the same three annual checks every plan requires: the Eligibility Test, the Benefits and Contributions Test, and the Key Employee Concentration Test, which caps benefits flowing to owners and officers, generally those earning above $160,000 in 2026 or owning more than 5% of the company, at 25% of total plan benefits. An assisted living community's roster typically includes a meaningful share of part-time and PRN caregivers, so the plan document's eligibility threshold directly shapes the population included in each test. A community that extends eligibility broadly to part-time staff generally has an easier time passing the Eligibility Test than one that restricts the plan to full-time employees only, since a narrower eligible population is more likely to skew toward higher-paid administrative staff.

The ACA look-back method for variable-hour caregivers

The ACA's employer mandate for applicable large employers relies on the look-back measurement method under 26 CFR Section 54.4980H-3 to classify PRN and variable-hour caregivers. An operator measures a caregiver's actual hours worked over a defined measurement period, typically 3 to 12 months, and averages them to determine whether that caregiver counts as a full-time equivalent for the following stability period. Given how common PRN and variable scheduling is across assisted living, an operator approaching or above the 50-full-time-equivalent-employee applicable large employer threshold should confirm its measurement period and stability period design with ERISA counsel before finalizing Section 125 eligibility rules.

Launching §125 for an assisted living community: 5 weeks

1. Week 1: Benecor confirms the community's entity structure, identifies which caregivers are W-2 eligible across full-time, part-time, and PRN classifications, and confirms whether the operator uses the ACA look-back method. The administrator selects a benefit menu and receives a signed savings projection.
2. Week 2: ERISA counsel drafts the plan adoption agreement and summary plan description with a rolling new-hire enrollment window built in for continuous hiring.
3. Week 3: Fast, QR-code enrollment staff complete during new-hire orientation and the community's next open enrollment, reaching caregivers across all three shifts.
4. Week 4: Election data transmitted to the community's payroll platform, whether that's a senior living-specific system like PointClickCare or a general platform like ADP or Paychex. Deduction codes configured as pre-tax for federal income tax and FICA, applied identically to base hourly pay, shift differentials, and PRN per-visit pay.
5. Week 5: First pre-tax payroll runs across the full staff as the plan goes live.