Business Tax Strategy · ProfitGuard Plus
FICA savings plans for school
districts and municipalities
Public employers pay the same employer share of FICA that private ones do, on every paycheck. A Section 125 preventative care plan lowers that bill the same way, and it does not disturb the pension, the union benefits, or the medical plan already in place.
Quick answer
- School districts and municipalities qualify like any other W-2 employer. What matters is payroll, not sector.
- The employer saves about 500 to 600 dollars per participating employee per year in FICA, and the saving repeats every payroll.
- Each participating employee receives about 1,400 dollars a year in preventative care benefits and takes home about 40 to 80 dollars more per paycheck.
- Gross pay does not change, so pay scales, steps and collective bargaining agreements are untouched.
- It does not replace or affect the existing medical plan. It requires one, and sits alongside it as an integrated Section 105 plan.
- The same two gates apply: full-time W-2 employees earning about 17,000 dollars a year or more, each with major medical coverage somewhere.
- Setup runs 30 to 45 days, with a mock payroll before anything goes live.
Why public payroll is a good fit
The saving is per employee and it repeats every payroll, so it scales with headcount. Districts and municipalities tend to have a lot of full-time W-2 employees with stable pay and existing major medical coverage, which is exactly the shape the two gates are looking for.
It is also money that comes out of a tax you already pay rather than a new line in the budget, which matters more in public finance than almost anywhere else.
What it does not touch
Gross pay and pay scales
Nothing about gross compensation changes, so steps, schedules and bargaining agreements are unaffected.
The pension
This is a payroll tax and benefits structure. It does not alter retirement plan contributions or service credit.
The existing medical plan
It requires a qualifying ACA medical plan and sits alongside it. It does not replace it and nobody loses coverage.
Who runs payroll
We coordinate with the payroll provider already in place. Nobody switches systems.
What the employees get
Access to preventative care for the whole household: telemedicine, licensed mental health support, evidence based wellness programs, health screenings, a virtual care assistant and chronic condition coaching. No copays and no per visit fees. Spouse and dependents included.
And a slightly larger paycheck, because of how the pre-tax election and the after tax reimbursement run through payroll. Nobody's gross pay moved.
Where to start
The fastest check is your headcount and one question: does each full-time employee have major medical coverage somewhere. From there we model your payroll and bring your business office and your CPA into the detail. The two gates are explained on who qualifies, and the setup path is on how long it takes to set up.
Frequently asked questions
Can a school district use a Section 125 FICA savings plan?
Yes. Districts run W-2 payroll and pay employer FICA like any other employer. The same two gates apply: full-time W-2 employees earning about 17,000 dollars a year or more, each with major medical coverage somewhere.
Does it affect the pension or retirement contributions?
No. This is a payroll tax and benefits structure. Gross pay does not change, so it does not alter retirement plan contributions or service credit.
Does it interfere with collective bargaining agreements?
It should not. Gross compensation stays the same and no existing benefit is removed. The plan adds preventative care on top of what is already offered.
How much would a district with 300 employees save?
At about 600 dollars per participating employee per year, 300 participating employees is roughly 180,000 dollars a year in employer FICA, repeating every payroll. Your exact number depends on payroll, participation, and state and local tax.
Do employees lose their current health plan?
No. The plan requires a qualifying ACA medical plan and sits alongside it. Existing medical, dental, vision and retirement benefits stay exactly as they are.
This is education, not tax or legal advice. Actual savings vary by payroll structure, participation, and state and local tax. Talk to your CPA about your specifics before you decide. ProfitGuard Plus is a marketing name for a structure built on IRS code sections 125, 106(a), 105, and 213(d).
See your ProfitGuard Plus number
Enter your W-2 headcount and see the combined value first. Then we'll run your exact numbers. You can also read the full walkthrough on the ProfitGuard Plus page or call +1 (586) 899-1003.
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