Employment and healthcare costs continue to rise, and the increases are no longer best understood as a temporary cycle. According to the Bureau of Labor Statistics, private-sector compensation costs rose 11.5 percent, total benefit costs rose 10.7 percent, and health-benefit costs rose 13.6 percent over the most recent three-year period. At the same time, a substantial share of employers still report unfilled openings, and many positions remain open longer than they did several years ago. The two most common responses are to absorb the higher cost or to reduce the benefits package. Both create secondary problems: either sustained margin pressure or greater difficulty attracting and retaining employees. A Payroll Tax Reduction (PTR) Plan offers a different approach. It coordinates an IRC Section 125 cafeteria plan with a Section 105 self-insured medical reimbursement arrangement. When structured correctly, it reduces the employer’s payroll-tax expense while using the recaptured dollars to fund additional employee benefits. The design is intended so that employees are not funding the employer’s savings. I will cover the mechanics and the employee-side impact in the next notes. If you would prefer to see the potential numbers modeled against your own workforce data first, you can schedule a 30-minute analysis here: Schedule a 30-minute analysis A short overview is also available here:
What is a Payroll Tax Reduction Plan? Dan Nuwash
Founder and Managing Partner
Finance For Thought Sources:
Bureau of Labor Statistics, Employment Cost Index (most recent three-year period).
National Federation of Independent Business, Small Business Economic Trends (job openings data). | 
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November 10, 2026
