1. Employer fit review
Confirm workforce size, existing group medical, payroll administration, executive sponsorship, and the employer’s goals. A weak fit should stop here.
2. ProForma
Use employer-specific census and payroll facts to model estimated participation and employer FICA savings. Keep assumptions visible. The standard $1,119.20 amount is a projection for most enrolled employees, not a guaranteed result.
3. Plan and advisor review
Review the proposed Section 125 and Section 105(b) structure, eligibility, qualified expenses, payroll mechanics, documentation, and ongoing administration with the employer’s qualified professionals.
4. Payroll testing and employee communication
Configure the approved payroll entries and test them before launch. Employee materials should explain elections, benefits, reimbursements, and whom to contact with questions.
5. Ongoing administration
Maintain plan documents, participation and reimbursement records, required testing, payroll reconciliation, and periodic review. The employer owns the plan and remains responsible for operating it correctly.