NO SETUP COST FOR EMPLOYER

Section 127 EAP Plan Documents Requirement

The CARES Act employer-based student loan relief is provided through the employer’s Section 127 Educational Assistance Program (EAP), which is established with “a separate written plan of an employer for the exclusive benefit of his employees to provide such employees with educational assistance.”

Even if the company already has a Section 127 EAP in place, the plan document must be updated to reflect the CARES Act student loan repayment opportunity.

This plan document requirement is easily met with the Core 127 plan document package. For a limited time Mid Michigan Health Insurance Advisors (MMHIA), will provide the plan documents at NO COST to employers during the pandemic. Typically this package cost $99 dollars to seup, and includes the formal written plan document, summary plan description, customized election, and claim forms, and more.

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Status

Optional, but highly
recommended*

Source

The CARES Act

Effective timeline

December 2025

* The Coronavirus Aid Relief and Economic Security Act (the “CARES Act”) provides a way for employers to help repay employee student loans, with tax benefits for both the employer and employee. Generally, a Section 127 Education Assistance Plan only allows an employer to pay or reimburse tuition and other qualified educational expenses incurred while the employee is with that employer. Section 2206 of the CARES Act modifies Section 127 of the Internal Revenue Code so that employers can pay up to $5,250 to repay employee student loans during the pandemic emergency period beginning March 27, 2020, and ending December 31, 2025. The amount paid is tax-free to employees and tax-deductible for the employer.

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