What is Section 125 Plan? | Meaning & Definition | Akrivia HCM

Section 125 refers to the Internal Revenue Code of 1986, which at Section 125(a), allows an employer to pay a portion of an employee’s healthcare costs. The company will contribute a certain percentage of the employee’s salary to cover their cost of coverage. It can be done in some ways, either with salary reductions or by arranging for a third-party administrator (TPA) to process the payments, such as ADP.

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