Section 125 Plan for Chiropractic Clinics: What Owners and Staff Can Do

• Chiropractors earned a median $79,200 per year in May 2025, and 57% work in offices of chiropractors, according to the Bureau of Labor Statistics (BLS) Occupational Outlook Handbook.
• About 36% of the 61,700 chiropractor jobs are self-employed positions (BLS, 2025), so owner eligibility is the first question for most clinics.
• The IRS lists sole proprietors, partners, and 2% or greater S corporation shareholders as ineligible for a cafeteria plan (IRS Employee Plans training, Lesson 4).
• Employer FICA is 6.2% Social Security plus 1.45% Medicare, or 7.65% in total (IRS Tax Topic 751, reviewed September 2026).
• A 25-employee clinic electing $130 a month each saves about $2,984 a year in employer FICA (disclosed hypothetical).

Most chiropractic clinics are small, owner-run practices. The doctor treats patients all day, the front desk handles scheduling and billing, and nobody has time to study payroll tax rules. Yet payroll tax is one of the few costs a clinic owner can lower without changing visit volume or patient care. A Section 125 plan does it by moving staff benefit costs to a pre-tax basis.

What is a Section 125 plan for a chiropractic clinic?

A Section 125 plan, also called a cafeteria plan, is a written employer plan under Internal Revenue Code Section 125 that lets employees pay for qualified benefits before taxes. For a chiropractic clinic, that means the doctors who are employees, the chiropractic assistants, the massage therapists, and the front-desk team can pay benefit costs with pre-tax dollars. FICA is the payroll tax that funds Social Security and Medicare. Pre-tax benefit dollars are not subject to it, so the employee pays less and the clinic pays less. The Social Security rate is 6.2% and the Medicare rate is 1.45% for both employer and employee, per IRS Tax Topic 751.

Can a chiropractic clinic owner join the clinic's Section 125 plan?

A chiropractic clinic owner can join only if the owner is a W-2 employee of the clinic and not a sole proprietor, a partner, or a 2% or greater S corporation shareholder. IRS cafeteria plan training says sole proprietors, partners in a partnership, and 2% or greater S corporation shareholders are ineligible to participate. This matters in chiropractic because the BLS reports about 36% of chiropractor jobs are self-employed positions. Many clinics are a single doctor's practice, so the owner is often the one person the plan cannot cover.

Owners in the first three rows often claim the self-employed health insurance deduction on their personal return instead. The IRS instructions for Form 7206 say that deduction is not available for any month the owner could have joined an employer-subsidized health plan, including a spouse's plan. Confirm the details with the clinic's CPA.

How much does a Section 125 plan save a chiropractic clinic?

A Section 125 plan saves a chiropractic clinic 7.65 cents in employer FICA for every pre-tax dollar staff elect. A staff member who elects $130 a month ($1,560 a year) generates $119.34 a year in employer FICA savings for the clinic. The same employee pays 7.65% less FICA on the same amount, so take-home pay rises about $9.95 a month from FICA alone, before any income tax savings.

These figures are hypothetical and assume every eligible employee enrolls at the same election. Actual savings depend on enrollment and on how much each person elects. The savings come only from W-2 employees. Owners who cannot join add nothing to the total, which is why Benecor models the real roster first.

Which chiropractic clinic employees can join the plan?

Any W-2 employee can join if the clinic's written plan document makes them eligible. Section 125 sets no minimum hours, so the clinic decides whether part-time chiropractic assistants and per-diem associates are included. A wider eligible group means more elections and more savings. A narrow group that covers only higher-paid staff can fail nondiscrimination testing. Independent contractors paid on a 1099 are not employees and cannot participate, which matters because many clinics use associate doctors or massage therapists on contract. Read the nondiscrimination testing guide→ before setting eligibility rules.

What do staff get from a Benecor Section 125 plan?

Chiropractic staff spend their days on their feet, adjusting tables, helping patients move, and handling a busy front desk. The benefit stack in the table above is built for people who cannot easily take a half day off for a doctor visit.

• $0 Virtual Urgent Care, 24/7: A chiropractic assistant with a sore back can see a clinician in the evening without missing a shift.
• $0 Virtual Primary Care and Mental Health Counseling: Routine care and counseling without a copay.
• 800+ commonly prescribed medications at $0: Maintenance prescriptions with no out-of-pocket cost.
• Discounts on in-person care: Procedures at 57% savings, specialist visits at 35% off, lab tests at 60% off, and imaging at 75% off.

See the Section 125 cafeteria plan guide→ for the full rules, and the physical therapy clinic guide→ for a similar practice type.

What compliance rules apply to a chiropractic clinic's plan?

A Section 125 plan needs a written plan document and must pass nondiscrimination tests each year (26 U.S.C. 125). Section 125 says all participants must be employees, and it defines highly compensated participants to include officers and shareholders who own more than 5% of the voting power or value of the company. The plan also cannot favor those groups in eligibility or benefits. If a plan fails a test, the affected highly compensated or key employees lose the tax exclusion on their elections, not the whole staff.

Small clinics rarely have trouble when most staff are eligible and enroll. The risk grows when one or two owner-doctors elect large amounts and few staff join. Benecor runs the tests before launch and again before year end. Elections are fixed for the plan year except for IRS-permitted life events, as explained in the Section 125 plan rules→.

How long does it take to set up a Section 125 plan for a chiropractic clinic?

A Section 125 plan for a chiropractic clinic takes about five weeks from signed engagement to the first pre-tax payroll. Benecor follows this sequence.

1. Week 1: Confirm the clinic's entity type, decide whether the owner can participate, and sort the roster into full-time, part-time, and contract workers.
2. Week 2: ERISA counsel drafts the plan document and summary plan description.
3. Week 3: Staff enroll in a few minutes, often between patient visits.
4. Week 4: Election data goes to the clinic's payroll platform, with deduction codes set as pre-tax.
5. Week 5: The first pre-tax payroll runs and the owner receives a compliance report.

Sources: U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, Chiropractors (May 2025 median pay, 2025 employment and self-employment share); IRS Employee Plans training, Cafeteria Plans Lesson 4; IRS Tax Topic 751, Social Security and Medicare withholding rates (reviewed September 24, 2026); IRS Instructions for Form 7206; 26 U.S.C. 125, Cornell Legal Information Institute.