Good for you! The Section 125 plan should save both you and your employees some hard earned dollars. In order to set this up, you'll need to establish the plan through the IRS. Typically, you can have either your payroll service, your insurance company, a third party administrator or a CPA firm handle the necessary paperwork. Even though this sounds like it should be "simple", you need to follow the rules of ERISA (which is the organization that handles profit sharing, pension plans, etc.). If you're not looking for a flexible spending account (FSA), you can set up a premium only plan (POP). The POPs are much easier (and cheaper) to administer. A Form 5500 needs to be filed with the IRS every year as an information return only-no tax liability due on that one (how about that?) If you're with ADP or someplace similar, contact them about getting started. It's possible that ADP would waive a portion of the setup fee just to have the business. Also, your health insurance provider might have some insights into the best way to get you set up.