A Section 125 (cafeteria) plan is an employer-sponsored plan that gives employees access to health insurance and childcare pretax benefits. These plans are able to provide net savings to employers (even after factoring in the cost of the health benefits plan itself) by reducing the amount of taxes that are subject to payroll tax and after the taxes are allocated providing a benefit to the employer. Section 125 plans also increase the wages of most employees. See the image below for an example.