Sunrise is one of western Broward County's largest cities, home to a suburban population of families and working professionals who increasingly seek accessible mental health services close to home. The private therapy practices that serve this market — often specializing in family therapy, adolescent counseling, anxiety and depression treatment, and couples counseling — rely on licensed clinical staff who expect competitive benefits packages. A Section 125 cafeteria plan is one of the most accessible tools a small Sunrise therapy practice can use to offer hospital-quality benefit structure at a fraction of the administrative cost.
Sunrise practices that contract with Florida Medicaid managed care organizations face the same reimbursement constraints as other South Florida behavioral health providers. FICA savings from a Section 125 plan — potentially $3,000–$6,000 annually for a mid-sized practice — improve practice margins without reducing care quality or staff compensation.
A Section 125 cafeteria plan allows employees to pay for eligible benefits with pre-tax dollars through salary reduction agreements. The benefits typically included in a Sunrise therapy practice plan: group health insurance premiums (the largest election for most staff), health FSA contributions (up to $3,300 in 2026 for out-of-pocket medical costs), and dependent care FSA contributions (up to $5,000/household for childcare expenses). Dental and vision premiums can also be added if offered as separate coverage elections.
The "pre-tax" designation means these amounts are excluded from both federal income tax and FICA (Social Security and Medicare) taxes. In Florida, where there is no state income tax, the FICA exclusion is the primary source of employee savings — but the federal income tax exclusion on FSA contributions also adds meaningful value for employees in higher federal brackets.
Step 1 — Adopt a written plan document before open enrollment begins. The document must specify: the employer, plan year, eligible employees (W-2 only), benefit options, election change rules, and FSA administration procedures. No salary reduction agreement is valid without an underlying plan document in force.
Step 2 — Conduct open enrollment before the plan year starts. Distribute election worksheets showing employees the dollar value of tax savings at different election levels. For Sunrise staff earning $45,000–$65,000, a $5,000 annual election saves $382 in FICA alone; with federal income tax savings in the 22% bracket, total savings approach $1,485.
Step 3 — Integrate with payroll. Confirm pre-tax coding with your payroll provider. Verify that deductions appear correctly on pay stubs — employees should be able to see the pre-tax designation.
Step 4 — Run annual nondiscrimination tests. Three tests required: eligibility, benefits, and key employee concentration. For Sunrise practices with diverse staff compositions, the eligibility test — which ensures rank-and-file employees have meaningful access to plan benefits — is the one to monitor most carefully.
Step 5 — Update the plan document annually. Review the document at every open enrollment to reflect current FSA limits, carryover provisions, and any plan changes. A stale plan document is one of the most common IRS audit findings for small employer plans.
Florida is at-will. Broward County therapy practices experience meaningful staff turnover — especially among newer licensed therapists building their client rosters. When employees terminate, FSA elections end as of the termination date (or last day of month, per plan document). FSA COBRA rights must be offered promptly. Your TPA handles COBRA notices if you notify them of terminations within the required window.
Florida's $14.00/hour minimum wage (2026) affects hourly staff at Sunrise practices. Scheduling coordinators, front desk staff, and billing assistants are often paid near this threshold. Verify that FSA elections — even modest ones — don't push effective hourly rates below the minimum wage floor.
No plan document for pre-existing pre-tax deductions: Many Sunrise practices have been deducting health premiums as "pre-tax" for years without an adopted plan document. This is one of the most common compliance failures — and it's correctable by adopting a plan document going forward and amending payroll records accordingly with help from a CPA.
Not offering FSA to administrative staff: If FSA elections are only offered informally to clinical staff, the Benefits Test may fail. All eligible employees must be offered the same plan benefits.
Ignoring the concentration test with a high-earning owner: Small Sunrise practices where the owner's election represents more than 25% of total plan benefits fail the Key Employee Concentration Test. The solution: increase participation among non-key employees, not eliminate the owner from the plan.
Stale plan document references: The 2026 health FSA limit is $3,300. Plans referencing the prior limit should be updated immediately.
A licensed advisor will review your options and respond within one business day.