Written plan document, summary, eligibility, election, and opt-out terms.
Section 125 cafeteria plan guide
What is a Section 125 wellness plan?
It is an employer-sponsored supplemental wellness plan evaluated alongside a written Section 125 cafeteria-plan structure. Only qualifying coverage and correctly operated elections receive the tax treatment allowed by law.
Plan categorySupplemental health and wellness
Payroll frameworkSection 125 cafeteria plan
Coverage relationshipWorks alongside major medical
How the structure works
Four connected parts, not one magic tax phrase.
- 01
The employer adopts written plan terms and defines eligible employees.
- 02
Eligible employees elect qualifying health coverage under the written cafeteria plan.
- 03
The administrator separates coverage, medical-expense reimbursements, nonmedical services, and taxable employee payments.
- 04
Finance and payroll apply the supported treatment, substantiate required expenses, reconcile each payroll, and maintain records.
What employers should verify
The words must match the documents and the operation.
Every pre-tax, post-tax, employer-funded, reimbursed, fixed, cash, and taxable amount.
Medical-expense substantiation, payroll reporting, tax, ERISA, privacy, administration, and nondiscrimination responsibilities.
Common searches, straight answers
What employers ask about Section 125 wellness plans.
Is a Section 125 wellness plan a cafeteria plan?
The Section 125 cafeteria plan is the written tax framework used for eligible employee elections. The wellness plan is the health and care arrangement connected to that framework. The final documents and operation must align.
Does it replace major medical?
No. The Plan is supplemental health and wellness designed to work alongside existing major medical coverage.
How are employees selected for enrollment?
The employer-specific review uses a gross-to-net illustration to identify employees who meet the documented eligibility criteria and show a positive projected paycheck result. Those employees may then choose whether to elect The Plan.
Is it an IRS-approved FICA tax credit?
No. There is no separate We Won Health FICA tax credit or government approval. Qualifying salary-reduction contributions used to purchase qualifying health coverage may be excluded from employment-tax wages when the written plan and actual operation satisfy the applicable rules.
Does Section 125 make wellness cash tax-free?
No. Cash rewards, fixed payments, premium refunds, and payments unrelated to incurred and substantiated medical expenses are not made tax-free merely by connecting them to a cafeteria plan or wellness activity.
Do general wellness purchases qualify as medical expenses?
Not merely because they support health. General health, nutrition, exercise, veterinary, and personal expenses are not represented by We Won Health as tax-qualified medical expenses.
Do preventive and preventative care mean the same thing?
Both phrases appear in employer searches. The Plan uses preventive care to describe earlier access, screenings, primary care, and practical support intended to help people act sooner.
Employer-specific review