As an employer you will find that you have the option to go either for the section 105 or for the section 125 plans. Both can provide you with tax benefits and both could be beneficial in their own way.

There is, however, a major difference between the two plans. Section 105 is a plan that could only be funded by the employer. In contrast to this the section 125 plan can be funded either by the employer or by the employees. The former is one where the ethical employer wishes to offer its employees benefits like health care and other benefits through insurance. Such employer also shares the premium contribution to the extent of 70% to 80%.

The section 125 plan is ordinarily set up by the employees using their own sources of funding. You can say that section 105 has a touch of benevolence while section 125 that of necessity.

In small business organizations, the spouse or the family member gets reimbursed for the health care expenses from their spouse or family heads. The owner of the enterprise is prohibited from participating in Section 105 plan. This prohibition does not extend to his or her spouse. This is one of the greatest appeals of the section 105 in the local, national, as well as international market.

Moreover, the reimbursement facilities enjoyed by your spouse or family members ensure that it also gives you benefit as the employer or employee as the case may be.