A Cafeteria Plan (includes Premium Only Plans and Flexible Spending Accounts) is an employee benefits program designed to take advantage of Section 125 of the Internal Revenue Code. A Cafeteria Plan allows employees to pay certain qualified expenses (such as health insurance premiums) on a pre-tax basis, thereby reducing their total taxable income and increasing their spendable/take-home income. Funds set aside in Flexible Spending Accounts (FSAs) are not subject to federal, state, or Social Security taxes. On average, employees save from $.25 to $.49 for EVERY dollar they contribute to the FSA
Section 125 Cafeteria Plan
- Group Medical
- Group Dental
- Group Vision
- Life Insurance / Accidental Death and Dismemberment (AD&D)
- Short-Term Disability (STD)
- Long-Term Disability (LTD)
- Long-Term Care (LTC)
- Employee Assistance Program (EAP)
- Travel Insurance
- Pet Insurance
- Section 125 Cafeteria Plan
- Consolidated Omnibus Budget Reconciliation Act (COBRA)
- Legal Services
- Qualified Retirement Plan
- Travel insurance
Section 125 Cafeteria Plan
FAQ'S
What is Section 125 Cafeteria Plans?
A Cafeteria Plan (includes Premium Only Plans and Flexible Spending Accounts) is an employee benefits program designed to take advantage of Section 125 of the Internal Revenue Code. A Cafeteria Plan allows employees to pay certain qualified expenses (such as health insurance premiums, medical expenses and dependent care) on a pre-tax basis, thereby reducing their total taxable income and increasing their spendable/take-home income.
As an employer, why should I provide Section 125 Cafeteria Plans?
There are tax advantages for both the employees and employers when establishing a Cafeteria Plan. The employer can lower their payroll taxes, which in turn can lower their workers’ compensation premium.
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