PTE Group Inc. is an insurance broker. We help employers evaluate payroll tax efficiency programs that combine preventive healthcare and wellness benefits with a structured payroll approach. The current program is designed around two separate premium components, each with a distinct purpose and tax treatment.
The Dual-Premium Structure
Services Premium
The Services Component is elected through the employer's Section 125 cafeteria plan. It funds the preventive healthcare and wellness services available to participating employees.
Reward Premium
The Reward Component is separately funded on an after-tax basis. The program's legal opinion analyzes the treatment of qualifying Reward payments under IRC §104(a)(3).
The Principal Internal Revenue Code Provisions
IRC §125 — Cafeteria Plans
Section 125 provides the federal framework for written cafeteria plans under which employees may choose between taxable compensation and qualified benefits. The pre-tax Services Component is structured through the employer's Section 125 plan.
IRC §3121(a)(5)(G) — FICA Wage Treatment
Section 3121(a)(5)(G) addresses payments under a cafeteria plan that are excluded from wages for FICA purposes when the statutory requirements are satisfied. This is the payroll-tax provision relevant to the employer's reduction in taxable payroll.
IRC §104(a)(3) — Accident or Health Insurance Payments
Section 104(a)(3) addresses amounts received through accident or health insurance for personal injuries or sickness and contains specific rules based on how the coverage is funded. The program's separately funded after-tax Reward Component and the resulting payment treatment are addressed in the legal opinion provided for adviser review.
National Law Firm Legal Opinion
A nationally recognized law firm has issued a written legal opinion addressing the program structure and the federal tax treatment of the dual-premium arrangement, including the Reward Component.
The legal opinion is available upon request to employers and their legal, tax, payroll, benefits, and financial advisers as part of the company's due-diligence review.
Designed for Employer Due Diligence
This is not presented as a tax credit, grant, refund claim, or replacement for an employer's existing major medical plan. It is an employer-sponsored preventive healthcare and wellness program with a payroll structure that should be evaluated from the actual plan documents, payroll mechanics, legal opinion, and administration procedures.
What Your Advisers Can Review
- The dual-premium structure and payroll flow.
- The Section 125 plan treatment of the Services Component.
- The after-tax funding of the Reward Component.
- The national law firm's legal opinion and its stated assumptions and conclusions.
- Employee paycheck illustrations and employer savings calculations.
- Program documents, enrollment procedures, administration, and audit-defense provisions.
Compliance Is More Than a Code Citation
The applicable Code sections establish the statutory framework. Actual compliance also depends on the written plan documents, employee elections, payroll implementation, premium funding, administration, and adherence to the program's terms. Employers should review those materials with their own advisers before implementation.
Want the Documents Behind the Structure?
Request the legal opinion, plan materials, payroll illustrations, and employer review package for your CFO, legal team, HR department, and tax advisers.
Request Compliance Materials →PTE Group Inc. provides insurance brokerage and educational services and does not provide legal or tax advice. Program eligibility, savings, tax treatment, employee impact, and availability depend on the applicable plan documents, employer payroll profile, employee elections, program administration, and applicable law. Employers should consult their own legal, tax, payroll, accounting, and benefits advisers before implementation.