For most small companies, every dollar they save on overhead is important. When those savings come from legitimately lowering payroll taxes, they may make a big difference. The Lumara Plan is a legal and strategic way to combine a self-insured medical expenditure reimbursement plan with a Section 125 plan for small businesses. What happened? Employers may save $60,000 or more a year on payroll taxes without decreasing compensation, raising benefit costs, or adding additional work for the staff.
We'll explain how the Lumara Plan saves you money, why it works better than other pre-tax benefit plans, and what it implies for your business's bottom line in this post.
The Payroll Tax Problem No One Talks About
When you handle payroll, you send money to the IRS in the form of FICA taxes for Social Security and Medicare. As the employer, you pay 7.65% of each employee's taxable earnings. Most company owners don't know that they may lawfully lower taxable salaries and, as a result, lower their payroll tax bill by employing IRS-approved perk packages.
But what's the true problem? Section 125 plans that are traditional don't go far enough.
That's where the Lumara Plan comes in.
What Sets the Lumara Plan Apart?
The Lumara Plan is a ready-to-use solution designed just for small and medium-sized enterprises. It combines three parts that meet IRS standards into one strong system:
Plan for a Section 125 cafeteria
Pre-Tax Cost Management Program (PCMP)
This combination lets companies pay workers back for eligible medical costs using money that hasn't been taxed yet. This lowers both the employee's taxable income and the employer's payroll tax burden.
It's not simply a hypothesis; it's math. The stats speak for themselves.
The $60,000 Savings Breakdown
Let's look at a common example of a small firm that uses the Lumara Plan:
30 people work here
The average pay is $50,000
The total amount of payroll is $1.5 million
Estimated amount each employee may get back before taxes: $2,000
The total amount of pre-tax deductions is $60,000, which is 30 times $2,000
Let's figure out how much money we saved now:
The employer's payroll tax rate (FICA) is 7.65%
$60,000 x 7.65% equals $4,590 in payroll tax savings
But that's just one layer.
Not only the $2,000 example above, but many firms in the Lumara Plan are saving $1,500 to $2,500 per employee per year via better plan design. That's $45,000 to $75,000 a year in recurrent payroll tax savings for 30 workers. And don't forget: this is without lowering pay, perks, or the quality of coverage.
Why a Self-Insured Medical Expense Reimbursement Plan Is So Good
The Lumara Plan is different from other Section 125 plans since it has a self-insured medical expenditure reimbursement plan (SIMRP). The SIMRP lets companies pay back workers for certain medical costs that are specified and allowed by the IRS, instead of only allowing premium-only deductions:
Paid for by the employee, their spouse, or their dependents
Not covered by regular insurance
The business may fully deduct these reimbursements, and the employee doesn't have to pay any taxes on them. This makes the payroll system a strong tax shelter.
This is not a health insurance plan, which is the most crucial thing. It is a reimbursement plan that works with your current benefits to provide you more options and save you money without changing your coverage.
Section 125 Plan for Small Business: More Than Just a Box to Check for Compliance
A lot of small firms have a Section 125 strategy, at least on paper. But these plans are frequently out of date, not used enough, or not following the rules. Even worse, they usually only work for pre-tax premiums, which means you miss out on big tax savings.
The Lumara Plan extends this idea by adding:
Section 125 plan paperwork that meets the requirements
Automatically checking for prejudice
Managing staff onboarding and communication
Putting in place a self-insured medical reimbursement system
You don't have to worry about audits, handle plan documentation, or keep track of how benefits are used by hand. You don't have to do anything; the "compliance checkbox" becomes a valuable instrument for saving money on taxes.
What Businesses Are Saying About Real-World Impact
After using the Lumara Plan, small company owners are witnessing the following:
Tech company with 25 workers
"We were paying around $300,000 a year in salaries. We paid slightly over $20,000 less in taxes because of the Lumara Plan. That included new software, hiring incentives, and we didn't have to pay anything up ahead."
Logistics Company with 45 workers
"This plan showed us that we could save $65,000 on payroll taxes, which we thought was just a cost of doing business. We now utilize it to pay for growing healthcare expenses and provide employees bonuses."
These kinds of things happen all the time. If the Lumara Plan is set up correctly and employees take part, it usually saves each employee between $1,500 and $2,500 in taxes per year.
How the Lumara Plan Is Put into Action: Simple and Fast
You would think that anything that has this much of an effect on your finances must be hard. No, it's not. One of the best things about the Lumara Plan is that it doesn't need companies to do anything.
This is how implementation works:
Design and Set Up of the Plan
The Lumara team sets up your Section 125 and SIMRP plan depending on how you pay your employees and what perks they get
Enrollment of Employees
Every employee goes through a computerized registration procedure and chooses to take part in qualified pre-tax reimbursements
Integration with Payroll
Lumara gives your payroll processor or software explicit instructions so that deductions are handled smoothly
Following the Rules and Keeping an Eye on Things
We take care of all the paperwork, testing for discrimination, and legal requirements for you
Most firms may be completely operational in 2–3 weeks, and they can start saving money on taxes as soon as the following payroll cycle.
Important Points: How Lumara Can Save You More Than $60,000 a Year
The Lumara Plan combines a self-insured medical expenditure reimbursement plan with a Section 125 plan for small business. This lets you lower your payroll taxes even more while still following IRS rules
Employers don't have to cut salary, perks, or coverage to save money on FICA taxes
Employees get more money in their pockets and greater access to care
A small corporation with 30 to 50 workers might expect to save between $45,000 and $75,000 per year
Implementation is quick, doesn't need any hands-on work, and follows all IRS standards
Last Word: Your Business Deserves More Than What It Is Now
If you're still utilizing a regular Section 125 plan, or worse, not having a pre-tax benefit plan at all, you're missing out on thousands of dollars in payroll tax savings per year.
The Lumara Plan is more than simply an update. It's a better, more effective approach to provide your team actual value and get back money you squandered on payroll without stopping work or raising prices.
Let's use your numbers. Get a free savings analysis and find out how much the Lumara Plan may help your company, beginning now.
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