Section 125 plan cost: what it costs, what you keep.

Section 125 plans don't cost money. They return money. This is the only category of employer benefit where the math, on day one, leaves the operating account with more cash than it started with. Most cafeteria plans get sold the wrong way: vendors quote a fee, the CFO asks how much, and nobody answers the only question that matters, which is what the employer actually keeps after the fee. Here is that number, and here is exactly what you are paying for to get it.

The headline number

A typical mid-market employer running a Benecor Section 125 plan in 2026 nets between $56 and $101 per enrolled employee per month, after every fee, every administrative cost, and every line item. On 100 employees, that is $67,200 to $121,200 returned to the operating account per year. Employee take-home pay rises by $70 to $110 per month at the same time, on the same dollars.

If the math above is interesting, the 48-hour custom projection below is built for you. Request a custom savings projection→ or call 312-546-1730.

Why most Section 125 cost answers are useless

Search the web for §125 plan pricing and you will find a range of $4 to $8 per employee per month and a series of vendors competing on who can deliver the cheapest plan document. None of those quotes answer the actual question, which is not what does this cost, it is what is my net after this runs.

A $5 per-employee per-month plan document with no integrated benefits, no member services, no compliance review, no audit defense, and no payroll-recovery infrastructure may technically be a Section 125 plan. It is also why most cheap plans are dormant by month four. The plan exists, payroll does not deduct correctly, employees do not elect, FICA is never recaptured, and the employer ends up paying both the fee and the payroll tax that should have been recovered. Net result: cost without savings.

Benecor does not sell that. We deliver an integrated managed benefits platform priced as a percentage of the savings we create, not as a fee against your operating budget. Different category, different math, different outcome.

The four cost buckets inside any Section 125 plan

Every Section 125 plan, anywhere in the market, has four cost layers. Cheap vendors quote one. Honest vendors quote all four.

The 4th line is where the market is most opaque. Most vendors leave it off the quote entirely, which is why their fee looks low and their plan fails to deliver. We price all four into one number.

Benecor's price, in one line

That number includes the §125 plan document, adoption agreement, and SPD; payroll integration with every major U.S. payroll system; the three annual §125 nondiscrimination tests; annual plan amendment when the IRS publishes new limits; year-end W-2 reconciliation; the audit-defense file; member services for every enrolled employee; multi-language enrollment and education materials; an integrated supplemental health and wellness benefit layer reviewed against current IRS guidance; and a written, payroll-specific savings projection issued before launch.

The fee is paid out of the employer's reduced quarterly 941 deposit, not out of operating cash flow. We say that explicitly because it is the part most CFOs need to hear once. The money to pay Benecor comes from the FICA the employer is no longer remitting to the IRS. It does not come from new spending.

What the employer actually nets, by the month

This is the only number that matters. Below is the verified math at three workforce profiles, with the $35 pepm fee subtracted before we get to the net figure.

FICA recapture per employee comes in between $91 and $136 per month depending on average wage and average §125 election. Benecor's fee is fixed at $35 pepm. The spread is yours. There is no version of the math where this loses money on a properly enrolled group.

What the employee actually keeps, by the paycheck

Inside a properly built Section 125 plan, the employee's gross pay does not change. Their taxable wages drop. Their federal income tax, Social Security, Medicare, and most state and local withholding all drop in lockstep. And because Benecor's integrated wellness layer includes a substantiated §213(d) reimbursement component, properly substantiated medical expense reimbursements come back to the employee tax-free.

The result is the only outcome in U.S. payroll where an employee can change nothing about their job and have a larger net paycheck the next pay cycle. Verified take-home lift averages $70 to $110 per month per enrolled employee, scaling with state of residence and election amount. The full before-and-after paycheck breakdown lives in the Section 125 for W-2 employees guide→.

How Benecor is different from a plan-document vendor

The cafeteria plan market splits cleanly into two categories. Most employers do not realize the categories exist until they have already paid for the wrong one.

Category 1: the plan-document vendor

A plan-document vendor sells a Section 125 document for a low fee. They do not integrate with payroll. They do not run the three annual nondiscrimination tests. They do not provide a Summary Plan Description redistribution when material changes occur. They do not maintain an audit-defense file. They are not insured. They are a publisher of legal documents at scale, and the plan that gets installed is only as effective as the employer's internal capacity to administer it. Most do not have that capacity, which is why most cheap §125 plans never deliver the savings they were sold against.

Category 2: the managed benefits platform

A managed benefits platform runs the plan end to end. The document is one of fifteen deliverables, not the only deliverable. Benecor sits in this category. We are the people who pull two months of your payroll data, model your eligibility against your real census, build the salary-reduction structure that maximizes recapture without triggering nondiscrimination failure, integrate with your payroll provider, capture elections, run the three §125 tests, layer in a §213(d)-substantiated supplemental health benefit, and operate the plan continuously through the year. We are not in the business of selling documents. We are in the business of returning FICA to the operating account.

Both categories charge real money. The first looks cheaper on the invoice. The second is the only one that delivers a measurable net savings number.

Why the $35 pepm fee looks higher than the industry average

A bare-bones POP plan-document vendor charges $1 to $3 pepm because they sell one thing. A full cafeteria plan with FSA and DCAP administration costs $4 to $8 pepm because the administrator is also processing claims. Benecor's $35 pepm sits in its own tier because we bundle the §125 plan, the supplemental health and wellness layer, member services, and the compliance posture into a single managed engagement.

The relevant comparison is not Benecor versus a $5 pepm document vendor. The relevant comparison is Benecor's $35 pepm versus the average employer FICA recapture per enrolled employee of $91 to $136 per month. The employer keeps the spread. The employee gets a larger paycheck. The plan delivers what was sold instead of sitting dormant.

The compliance posture you are paying for

The supplemental wellness and benefit layer inside the Benecor plan is structured as substantiated reimbursement of qualified medical expenses under IRC §213(d). It is not a wellness reward paid on the completion of activities without substantiation, which the IRS addressed in Chief Counsel Advice 202323006 (June 2023) and subsequent guidance through 2024. Our plan structure has been reviewed by independent ERISA tax counsel against CCA 202323006 and the July 2023 proposed amendments to Treas. Reg. §1.105-2. We retain the written opinion on file.

If you are a CFO, HR director, broker, or CPA evaluating a §125 plus supplemental benefits offering, this is the question you should be asking every provider you talk to. Most cannot answer it. We can, and we will share the relevant documentation under NDA during diligence. See our full compliance posture→.

What gets included at $35 pepm, line by line

A point-by-point list of what the fee covers. Print this and use it to compare against any other quote you receive.

1. Drafting of the written §125 plan document, adoption agreement, and Summary Plan Description
2. Annual amendment of the plan document when the IRS publishes new annual limits
3. The three §125 nondiscrimination tests run annually: Eligibility, Contributions and Benefits, and Key Employee Concentration
4. Integration with the employer's payroll provider so deductions reduce W-2 Boxes 1, 3, and 5 simultaneously
5. Capture and storage of every employee's salary-reduction agreement
6. Year-end W-2 reconciliation support
7. Multi-language employee enrollment and education materials
8. Member services for every enrolled employee through the plan year
9. An integrated supplemental health layer with substantiated §213(d) reimbursement of qualified medical expenses
10. Audit-defense file retention for the statutory period
11. A written, payroll-specific savings projection before launch
12. Ongoing payroll-recovery monitoring through the plan year

What is not included: nothing material. The fee is the fee. If a service is needed and not on this list, it is not billed separately, it is built.

The break-even formula, applied to your payroll

The break-even point on a Section 125 plan with Benecor is the moment in the plan year when accumulated employer FICA recapture exceeds accumulated administration fee. The formula is one line.

At $35 pepm against $136 per employee per month in FICA recapture, the plan breaks even before the first payroll closes the cycle.

There is no waiting period. There is no ramp. The first payroll the plan runs, the math is already net positive.

What this looks like at the conversation level

Most engagements start with a 15-minute call. We pull two months of de-identified payroll data, run the eligibility and savings model against the real numbers, and return a written projection within 48 hours. The projection states the exact monthly FICA recapture, the exact $35 pepm fee against the projected enrollment, the exact net savings to the operating account, and the exact per-employee paycheck lift in the dominant state of residence. The number arrives in writing, signed, on Benecor letterhead. You take it to ownership, to the CFO, to the board, to the broker. If the number is wrong against your actual payroll once the plan is running, we make it right.

There is no scenario where an engagement starts without that written number first. We do not sell the plan. We deliver the projection, and the projection sells the plan.

The operational walkthrough lives at how it works→. The full compliance posture is documented at compliance→. Brokers placing this with employer clients use the broker partner program→.

We will not quote a number without seeing your payroll. We will not promise an employee paycheck lift without the verified withholding math behind it. We will not sell a plan we believe will fail nondiscrimination testing against the employer's actual census. We will not install a plan structure that conflicts with current IRS guidance on wellness benefit substantiation. We will not bill the employer in advance of generating the savings that pay our fee.

The reason we publish all of this on a public page is that the conversation is faster when the prospect arrives already aligned. Most §125 conversations waste 90 minutes on whether the math is real. Ours start at minute 91.