Section 125 for Home Instead Franchise Operators
By David Newman · Referral Partner, Section 125 Savings · San Pedro, CA
Home Instead franchisees often have 50-500 caregivers. Savings are immediately significant.
Home Instead franchisees commonly run 50-500 W-2 caregivers per location, making this category one of the largest-scale single-franchise operations in the country. Caregiver wages typically fall in the $26K-$34K range — squarely in the Section 125 eligibility sweet spot. With caregiver workforces at this scale, the savings are immediately significant from day one.
Affinity Hospice (multi-state, $140K+/year saved, CFO is a CPA who commissioned the CBIZ review) is the closest case-study analog. The structure works identically for Home Instead franchises with similar caregiver workforces.
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How it works for Home Instead operators
On a 100-caregiver Home Instead franchise, Section 125 Preventive Care delivers $68,160/year in net employer FICA savings (100 × $681.60) + estimated $36,000/year in WC reduction at the home-health 5% rate (conservative half-rate). Combined: ~$104,000/year. 100 caregivers each take home an additional $863/year — $86,300 of additional caregiver compensation, at zero net employer cost.
For larger Home Instead franchises (200-500 caregivers), savings cross $200K-$500K/year. The retention math is meaningful: average home-care turnover is 60-90% per CMS data; even modest reductions in turnover save $10,000+ per saved hire in recruiting and training costs.
Want to model your specific footprint? Use the Multi-Location Calculator → for combined savings across all your Home Instead locations.
Closest case study analog: Affinity Hospice
CBIZ conducted rigorous vetting and issued a letter determining that the plan qualifies as a cafeteria plan meeting the requirements of IRC Section 125.
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Skepticism is the right response. We don't ask you to take our word for it — we bring institutional proof that convinced CPAs, CFOs, attorneys, and insurance brokers to enroll their own companies.
Darcy L. Hitesman, J.D.
35+ years as an Employee Benefits attorney specializing in IRC Section 125, ERISA, HIPAA, and the ACA. Her May 5, 2025 opinion letter concludes: “In this firm's opinion, the Program described satisfies applicable IRS requirements.”
She specifically reviewed the IRS Chief Counsel Advice memoranda on "double-dip" arrangements — the exact schemes the IRS has flagged — and concluded this program is built differently and compliantly.
CBIZ Advisors LLC
CBIZ independently reviewed the program against IRC §§ 125, 105, and 106, plus ERISA, ACA, and COBRA requirements. Their August 22, 2025 letter concludes: “If operated per its provisions, the Program appears to satisfy the requirements of ERISA, the ACA, and COBRA as well.”
This review was commissioned by Affinity Hospice's CEO before enrolling his nationwide organization — and the CFO (himself a CPA) shared the letter publicly in his testimonial.
Direct From the U.S. Government
Section 125 has been in the Internal Revenue Code since 1978. Congress wrote it there specifically to encourage employers to fund preventive healthcare for American workers. This is not a loophole — it is the precise, intended use of a 47-year-old federal law, grounded in IRS Revenue Ruling 69-154, the specific published ruling supporting the benefit payment structure.
→ Verify on IRS.gov — Section 125 Cafeteria Plans ↗Questions specific to Home Instead franchises
Content reviewed by Virginia Fish, CPA — tax and employer benefits specialist with 10+ years in financial reporting and payroll tax strategy.
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Verified: CBIZ Advisors LLC (Aug 2025) · HitesmanLaw P.A. (May 2025)
$500K legal protection per enrolled employer · IRS Section 125 · Federal law since 1978