In an effort to be a one-stop shop for you, we’re now providing a Section 125 Cafeteria Plan, as well as Wrap Documents for Benefit Plans. These plans will help keep your business compliant. Further, when you work with us, you’ll get this plan at a more affordable rate than many other agencies.
Section 125 Cafeteria Plan
A Section 125 Plan, otherwise known as a Cafeteria Plan, allows employers to provide their employees with a choice between cash and certain qualified benefits without adverse tax consequences, reducing the employee and the employer’s tax liability. There are four basic forms of Cafeteria Plans:
- Premium Only Plans (POP): The most basic and popular type of Section 125 plan. POPs allow the employees to pay their portion of the insurance premium with pre-tax dollars. Benefits offered within a POP include health, dental, vision, accidental death and dismemberment, short- and long-term disability, and group-term life insurance on the life of the employee.
- Flexible Spending Account (FSA): Employees make a pre-tax contribution to a flexible spending account where they may later seek reimbursement for expenses for child care, health plan deductibles and eligible medical expenses otherwise not covered under a health plan. Three benefits under an FSA include medical care reimbursement, dependent care assistance, and adoption assistance.
- Full Cafeteria Plan: In a full cafeteria plan, the employer makes a non-elective contribution for each eligible employee and each eligible employee may spend the employer’s contribution to purchase any benefits offered within the cafeteria plan. The employee may also contribute pre-tax dollars to purchase additional benefits to what he/she had purchased using the employer’s contribution.
- Simple Cafeteria Plan: Certain small employers’ plans may qualify as simple cafeteria plans so long as it meets certain contribution, eligibility and participation requirements.
We understand that employee benefits are important in every business and our experienced team is dedicated to helping your business remain compliant and answering any questions you may have. If you would like to learn more about Section 125 or have any questions please schedule time with Ray Ramirez or call/text (858) 384-1506.
For a detailed overview, please download Section 125 Cafeteria Plan Common Questions.