Confirm the net savings.
The employer math should clearly separate the $91.80 gross monthly payroll tax reduction, the $44 administration cost and the $47.80 net monthly employer savings.
Employer review
What should your company verify before moving forward?
Review the employer savings, employee value, payroll setup and tax questions on your own or with anyone you want involved in the decision.
A practical review forFinancePayrollHR and BenefitsOptional professional review
Start with your role
Focus on the area that matters to your decision.
See what payroll needs to add.
Coordination Group works with your payroll team to incorporate the required recurring entries into the existing payroll process.
Understand the employee experience.
Review the potential paycheck effect, enrollment experience, healthcare benefits and the communication employees will receive.
Bring in another professional only if you want one involved.
If you choose to involve a CPA, tax professional or benefits Advisor, Coordination Group can provide the plan and payroll information relevant to their review.
The core review
Eight questions that make the decision easier to understand.
A serious review should connect the employer math to the employee experience and the actual payroll setup.
- What is the net employer savings?The net employer savings is $47.80 per participating employee each month, or $573.60 annually, after the $44 monthly administration cost. The $91.80 figure is the gross monthly payroll tax reduction before that cost.
- How was the total employer estimate built?The preliminary website estimate multiplies the W-2 headcount entered by $573.60 in annual net employer savings to show the opportunity at that workforce size. The company-specific amount is confirmed later using actual participation and payroll information.
- What will employees see in their pay?Participating employees may see higher net take-home pay without an increase in gross wages. The exact change varies by employee based on payroll and tax circumstances and is confirmed using actual payroll data before implementation.
- What healthcare benefits do employees receive?Participating employees receive added healthcare benefits that include primary and urgent care office visits, 24/7 virtual direct primary care, mental health support, prescription benefits and preventive care, along with additional health resources.
- How are the payroll components treated for tax purposes?They are not all treated the same way. The arrangement uses both pre-tax and post-tax payroll components, and the tax treatment of each depends on the specific component and applicable tax rules. The governing plan documents describe how those components are structured.
- What does payroll need to implement?Implementation is designed to be straightforward. Once you decide to proceed, Coordination Group coordinates the payroll census, setup and enrollment steps with your team. The required recurring entries are then incorporated into the normal payroll process.
- What documents are available for review?Employers can review the Summary Plan Description, controlling Plan Document and supporting compliance materials before implementation. Additional materials can be provided if you choose to have a CPA, tax professional, payroll specialist or benefits Advisor conduct a deeper review.
- Who is responsible after implementation?The employer continues its normal payroll and workforce responsibilities. Coordination Group remains involved for implementation coordination and ongoing questions, while the program’s administrative process supports enrollment, benefits and ongoing administration.
Questions worth asking
Some of the hardest questions are also the most useful.
You do not have to ignore skepticism to evaluate the opportunity. A good review should make the difficult questions easier to answer.
No. Funding, employee benefits, plan documents and the tax treatment of employee payments can differ. The label alone does not tell you whether two arrangements operate the same way.
“Double dipping” is an informal term often used when the same economic amount appears to receive more than one tax exclusion, such as pre-tax deductions being returned as tax-free cash without an independent basis for that treatment. What matters is whether each component has a separate, supportable tax treatment and documentation. If you want an independent professional review, supporting materials can be provided.
Yes. IRS Chief Counsel Memorandum 202323006 examined the tax treatment of certain wellness indemnity payments. The memorandum is not precedential, but it illustrates why the tax treatment of specific payments should be reviewed rather than inferred from a plan label.
Not necessarily. You can complete the initial evaluation without adding another party. If you would like your CPA or benefits Advisor to review the opportunity, Coordination Group can provide the information relevant to their review.
Tax framework
The label is only the starting point.
Section 125 provides a federal framework for qualifying pre-tax benefits, but the label alone does not tell you how an arrangement works. The key is how the actual payroll components are structured, treated and documented.
Pre-tax amount used in the employer savings model$1,200 per participating employee each month.
What produces the employer payroll tax reductionFor wages subject to both employer Social Security and Medicare taxes, the 7.65% employer rate applied to the $1,200 pre-tax amount produces a $91.80 gross monthly payroll tax reduction.
Separate payroll componentsThe arrangement also includes a separately handled post-tax component. Pre-tax and post-tax components are not treated as one combined transaction.
DocumentationGoverning plan documents and supporting compliance materials are available if you want a deeper review or choose to involve another professional.
Complex payroll structures
A few employer structures need extra payroll review.
If your company uses multiple EINs, a PEO, a staffing model or another complex payroll structure, Coordination Group can review the legal employer and payroll setup with your team before implementation.
See additional implementation questions
- Legal W-2 employer for the participating population
- Responsibility for payroll and employer tax reporting
- Multiple EINs or payroll systems, if applicable
- Enrollment, payroll reconciliation and employee changes
- Any additional review needed before implementation
Have a specific question?
Bring the question to us.
You can bring the question directly to Coordination Group. If you want someone else involved, we can also work with the Finance, Payroll, HR, CPA, benefits Advisor or other professional you select.
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