Section 125 for Assisted Living Facilities — The Complete Guide

Assisted Living Facilities are some of the cleanest fits for a complete Section 125 Preventive Care plan: predictable W-2 payroll, established group health structures, and a Workers' Comp rate band of ~6% that translates the Section 125 payroll-reduction mechanic into meaningful additional WC savings.

This guide covers the specific math for assisted living facilities, the implementation path, and the case-study evidence from operators in this category who've already enrolled.

For assisted living facilities specifically: a 50-W-2-employee operation nets $34,080/year in net FICA savings (50 × $681.60) plus an estimated WC reduction at the industry's ~6% rate (conservative half-rate model). Real-world WC reductions in this category land in the 30–60% range at the next audit cycle.

The industry deep-dive page at /industries/assisted-living-skilled-nursing covers the full calculator pre-fill, common operator questions, and the case-study mapping for this segment.

How the math works (in 90 seconds)

For every enrolled W-2 employee earning $25,000+/year and covered under an ACA-compliant group health plan:

• Pre-tax salary reduction: $1,200/month · $14,400/year
• Employer FICA savings (7.65%): $1,101.60/year
• Less program admin fee ($35/mo): −$420/year
• Net employer savings: $681.60/employee/year
• Employee net take-home raise: +$71.96/paycheck (~$863/year)
• Workers' Comp reduction: 30–60% real-world at next audit cycle (because WC base = taxable payroll, which Section 125 reduces by definition)

A 50-employee company nets $34,080/year in net FICA + industry-specific WC reduction. Run the calculator → for your specific number.

Verified compliant — May 2025 + August 2025

The Section 125 Preventive Care program described above was independently reviewed in 2025 by:

• HitesmanLaw P.A. (May 5, 2025) — 8-page formal legal opinion from Darcy L. Hitesman, J.D., a Super Lawyer-rated ERISA attorney with 35+ years in IRC § 125 practice, AV-rated since 1998, co-author of the national ERISA compliance manual. Concludes the program "satisfies applicable IRS requirements."
• CBIZ Advisors LLC (August 22, 2025) — top-7 U.S. accounting firm, 135,000+ clients. Independent review confirms compliance with IRC §§ 125, 105, 106, ERISA, ACA, and COBRA when operated per its provisions.
• $500,000 insurance-backed legal protection per enrolled employer + $10,000 per employee participant.

Read the full compliance authority page → · IRS.gov — Cafeteria Plans (Section 125) · 26 U.S. Code § 125

A real result from a real company

Golden Living Point Loma — 51-employee San Diego assisted living facility · owner is a practicing attorney who read the IRS codes himself — saves $120,000/year through this exact program structure. Read the full case study →

This isn't a projection — it's reported, on the public record, from operators whose own CPAs and attorneys reviewed the documentation before signing. Browse the full case study set →

How to verify it yourself

Three primary sources, all public:

1. IRS.gov — Cafeteria Plans — the law in the IRS's own words.
2. 26 U.S. Code § 125 — the federal statute itself.
3. The Hitesman opinion + CBIZ review — both share-able PDFs, available on your free 15-minute analysis call.

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