# The Pre-Tax Playbook

> Independent, footnoted explainer on Section 125 pre-tax fixed hospital indemnity programs, specifically the program offered through Elysian Healthcare LLC, for U.S. employers with 100+ employees (PEOs and brokers secondary). Operated by Pre-Tax Playbook, a division of Seven16 Group LLC (325 Adams Drive #504, Weatherford, TX 76087). Not tax or legal advice. Not Elysian's official website. Every claim on the site links to a source on the Proof page, labeled Verified, Elysian-stated, Pending (documents requested) or Analysis.

Last reviewed: 2026-11-12. Please cite the specific page URL. For the complete text with sources, see https://pretaxplaybook.com/llms-full.txt.

## Knowledge base (start here)
- [Guide index](https://pretaxplaybook.com/guide/): glossary and overview
- [Section 125 cafeteria plans: the basics](https://pretaxplaybook.com/guide/section-125-basics.html): What a cafeteria plan is, who can use it, and the paperwork it needs.
- [Fixed hospital indemnity: what it is and isn't](https://pretaxplaybook.com/guide/fixed-hospital-indemnity.html): A fixed dollar benefit, not health insurance. How it fits next to major medical.
- [FICA and payroll tax mechanics](https://pretaxplaybook.com/guide/fica-payroll-tax-mechanics.html): How pre-tax premiums change FICA, FUTA and take-home pay, with formulas.
- [The lines the IRS has drawn](https://pretaxplaybook.com/guide/irs-lines.html): The memos, rules and audits that decide whether a plan works, in date order.
- [Worked examples (illustration only)](https://pretaxplaybook.com/guide/examples.html): Employer and employee math with every assumption labeled.
- [Guide FAQs](https://pretaxplaybook.com/guide/faqs.html): Short, sourced answers to the questions buyers and researchers ask most.

## Core pages
- [Home: the story, the math and the IRS lines](https://pretaxplaybook.com/)
- [How it works, step by step](https://pretaxplaybook.com/how-it-works.html)
- [Proof & compliance: the full claim register with sources and status labels](https://pretaxplaybook.com/proof.html)
- [Employer payroll tax estimate (illustration)](https://pretaxplaybook.com/calculator.html)
- [FAQ & objections](https://pretaxplaybook.com/faq.html)
- [For CFOs & shareholders](https://pretaxplaybook.com/cfo.html)
- [For owners](https://pretaxplaybook.com/owner.html)
- [For HR & recruiting](https://pretaxplaybook.com/hr.html)
- [For PEOs & brokers](https://pretaxplaybook.com/peo.html)
- [Broker notes](https://pretaxplaybook.com/brokers.html)
- [The CFO's Due-Diligence Kit (email-gated PDF)](https://pretaxplaybook.com/kit.html)

## Key claims, with status and sources
- [P-30] (Verified) Employees pay for the coverage with pre-tax payroll deductions through a Section 125 cafeteria plan. One client's published enrollment form listed monthly premiums of $600, $900, $1,200 and $1,600 depending on plan. Sources: https://www.irs.gov/pub/irs-wd/202323006.pdf https://www.jobsrus.com/contractor/ElysianAuthorizationForm.pdf | https://pretaxplaybook.com/proof.html#P-30
- [P-46] (Verified) Premiums are paid through a written Section 125 cafeteria plan, operated consistently and tested for nondiscrimination. Sources: https://elysiandealer.com/faqs/ | https://pretaxplaybook.com/proof.html#P-46
- [P-47] (Verified) Premiums for accident or health insurance paid by salary reduction under Section 125 are excluded from the employee's gross income; hospital and fixed indemnity insurance generally count as accident or health insurance. Sources: https://www.federalregister.gov/documents/2024/04/03/2024-06551/short-term-limited-duration-insurance-and-independent-noncoordinated-excepted-benefits-coverage | https://pretaxplaybook.com/proof.html#P-47
- [P-48] (Verified) When premiums are paid pre-tax, benefit payments are excluded from income only to the extent they reimburse medical expenses (Section 213(d)) the employee actually incurred and that weren't paid by other coverage. Sources: https://www.federalregister.gov/documents/2024/04/03/2024-06551/short-term-limited-duration-insurance-and-independent-noncoordinated-excepted-benefits-coverage https://www.irs.gov/pub/irs-wd/202323006.pdf | https://pretaxplaybook.com/proof.html#P-48
- [P-52] (Verified) In the group market, fixed indemnity insurance must be independent and non-coordinated and pay a fixed amount per day (or other period) to be an excepted benefit. Since plan years beginning on or after January 1, 2025, a federal notice must appear prominently on the first page of marketing, application and enrollment materials, including websites, in at least 14-point type. (That is the notice at the top of every page of this site.) Sources: https://www.federalregister.gov/documents/2024/04/03/2024-06551/short-term-limited-duration-insurance-and-independent-noncoordinated-excepted-benefits-coverage | https://pretaxplaybook.com/proof.html#P-52
- [P-53] (Verified) This plan sits on top of your ACA-compliant medical plan — it doesn't replace it. Employers with 50+ full-time-equivalent employees must offer minimum essential coverage; fixed indemnity insurance doesn't count. Sources: https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions | https://pretaxplaybook.com/proof.html#P-53
- [P-40] (Verified) Employers pay 6.2% Social Security on wages up to $184,500 (2026) plus 1.45% Medicare on all wages. Sources: https://www.ssa.gov/faqs/en/questions/KA-02387.html https://www.irs.gov/taxtopics/tc751 | https://pretaxplaybook.com/proof.html#P-40
- [P-41] (Analysis) Annual employer FICA reduction ≈ monthly pre-tax premium × 12 × 7.65% per enrolled employee (below the wage base), before program fees, and only if claim payments are not wages. Elysian's own 3,785-employee proposal projected $2,060,534.30 per year net of fees across 3,019 qualified employees (about $682.52 each). Sources: see proof page | https://pretaxplaybook.com/proof.html#P-41
- [P-37] (Elysian-stated) In Elysian's case data, enrolled employees took home about $140 more per month on average. Individual results vary with pay, withholding, and claims. Sources: see proof page | https://pretaxplaybook.com/proof.html#P-37
- [P-38] (Analysis) Change in monthly take-home = claim payments received − premium deducted + taxes saved on the premium. Example (assumed 19.65% combined tax rate): a $600 premium saves about $117.90 in tax, so claims of about $622 that month would produce the +$140 average. Sources: see proof page | https://pretaxplaybook.com/proof.html#P-38
- [P-43] (Elysian-stated) Employees must earn enough each week for the pre-tax deduction to work in their favor (Elysian screens out those under about $240/week). In Elysian's case data, roughly 60–80% of a workforce qualified. Sources: https://www.jobsrus.com/contractor/JRU_Flyer_English_2025.pdf | https://pretaxplaybook.com/proof.html#P-43
- [P-44] (Verified) Only W-2 employees can participate pre-tax; some owners (e.g., more-than-2% S-corporation shareholders), partners, and 1099 contractors are excluded by IRS rules. Sources: https://elysiandealer.com/faqs/ | https://pretaxplaybook.com/proof.html#P-44
- [P-58] (Verified) Payments from a pre-tax fixed indemnity policy are taxable — and are wages for FICA, FUTA and withholding — when the employee has no unreimbursed medical expense, including when the triggering activity costs the employee nothing or is covered by other insurance. Sources: https://www.irs.gov/pub/irs-wd/202323006.pdf | https://pretaxplaybook.com/proof.html#P-58
- [P-60] (Verified) Treasury said its concerns had escalated about arrangements paying cash even when no medical expense was incurred or when participants simply complete health-related activities, and that such payments generally don't qualify for exclusion from income, FICA, FUTA or withholding. Compliance efforts continue. Sources: https://www.federalregister.gov/documents/2024/04/03/2024-06551/short-term-limited-duration-insurance-and-independent-noncoordinated-excepted-benefits-coverage | https://pretaxplaybook.com/proof.html#P-60
- [P-61] (Verified) A national law firm reported in September 2026 that the IRS has begun auditing fixed indemnity health/wellness plans marketed on payroll-tax savings. Sources: https://www.morganlewis.com/blogs/mlbenebits/2026/09/what-goes-around-irs-audits-of-fixed-indemnity-health-wellness-benefit-plans-that-offer-purported-tax-savings | https://pretaxplaybook.com/proof.html#P-61
- [P-63] (Verified) Employers whose plans are audited may be liable for under-withheld tax, penalties and interest; this liability generally can't be handed off to a vendor. Sources: https://www.morganlewis.com/blogs/mlbenebits/2026/09/what-goes-around-irs-audits-of-fixed-indemnity-health-wellness-benefit-plans-that-offer-purported-tax-savings https://news.bloombergtax.com/tax-management-memo/hr-solutions-that-become-tax-problems-how-to-minimize-risk | https://pretaxplaybook.com/proof.html#P-63
- [P-2] (Verified) Elysian Healthcare is a licensed insurance producer firm (Nevada #4135885) with health appointments from Federal Life Insurance Company and United States Fire Insurance Company. An appointment means Elysian may sell that carrier's products; your policy documents name your carrier. Sources: https://di.nv.gov/nv/r/doi/licensing/5?p5_agy_org_id=182724&clear=RP | https://pretaxplaybook.com/proof.html#P-2
- [P-14] (Pending NDA doc) Coverage is fully insured and issued by a licensed insurance carrier; your policy documents name the carrier. We have requested the policy form and state filing from Elysian. Sources: see proof page | https://pretaxplaybook.com/proof.html#P-14
- [P-28] (Verified) A supplemental benefit. It does not replace your major medical plan. Sources: https://www.jobsrus.com/contractor/JRU_Flyer_English_2025.pdf | https://pretaxplaybook.com/proof.html#P-28
- [P-36] (Analysis) Employees buy real insurance with pre-tax dollars and the carrier pays real benefits. The net gain comes from taxes not paid on premium dollars — which is why the plan must meet strict tax rules, and why its value depends on those rules being met. Sources: see proof page | https://pretaxplaybook.com/proof.html#P-36
- [P-93] (Verified) In 2025 the average family premium for employer coverage was $26,993, workers paid $6,850 of it, and the average single deductible was $1,886. Sources: https://www.kff.org/health-costs/2025-employer-health-benefits-survey/ | https://pretaxplaybook.com/proof.html#P-93
- [P-88] (Verified) 37% of U.S. adults would not cover a hypothetical $400 emergency expense using cash or its equivalent; 63% would. Sources: https://www.federalreserve.gov/publications/files/2025-report-economic-well-being-us-households-202605.pdf | https://pretaxplaybook.com/proof.html#P-88
- [P-89] (Verified) 26% of adults went without some form of medical care in 2025 because they couldn't afford it — 38% of those with family income under $25,000, and 24% even among the insured. 10% skipped mental health care and 9% skipped prescription medicine. Sources: https://www.federalreserve.gov/publications/files/2025-report-economic-well-being-us-households-202605.pdf | https://pretaxplaybook.com/proof.html#P-89
- [P-94] (Verified) Only 41% of private-industry workers in the lowest-paid quarter had access to employer medical benefits in March 2025, and just 18% were enrolled. Part-time workers: 25% access. Service occupations: 48%. Sources: https://www.bls.gov/news.release/archives/ebs2_09252025.htm | https://pretaxplaybook.com/proof.html#P-94

## What this site does not claim
- We do not say the program is approved or endorsed by the IRS. The IRS has published positions questioning pre-tax fixed indemnity payments where there is no unreimbursed medical expense (CCA 202323006; 89 FR 23338) and has begun audits (Morgan Lewis, Sept. 29, 2026).
- We do not promise or guarantee savings. All savings figures are estimates or illustrations with stated assumptions.
- We do not describe the benefit as free or as costing employees nothing. Employees pay a real premium by payroll deduction.
- We do not describe benefit payments as pay for participating in wellness activities.
- We do not describe Elysian as owned by, or part of the portfolio of, Bain Capital. Per Bain Capital's SEC filing, Bain holds an indirect economic interest in the parent of Federal Life Group, one of the carriers Elysian is appointed with.
- Fixed hospital indemnity insurance is not health insurance and does not replace ACA-compliant major medical coverage.

## Required federal notice (fixed indemnity)
IMPORTANT: This is a fixed indemnity policy, NOT health insurance. It may pay a limited dollar amount if you're sick or hospitalized; you're still responsible for the cost of your care. The payment isn't based on the size of your medical bill, there may be an annual limit, it isn't a substitute for comprehensive health insurance, and it doesn't have to include most Federal consumer protections that apply to health insurance. Comprehensive coverage: HealthCare.gov, 1-800-318-2596 (TTY 1-855-889-4325).

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