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Exactly What Benefits can be offered as part of a Cafeteria Plan?
What type of plans are available?
What is a Flex Convenience Card?
How do I acquire a Section 125 claim form?
A cafeteria plan is fringe benefit plan specifically authorized by Section 125 of the Internal Revenue Code. It is a way of providing employees with valuable benefits—where both the employer and employees save significant amount on taxes. Generally, employees are given a choice to “redirect” part of their salary. Each employee then uses the “redirected” part of his salary to purchase benefits from a “menu” of non-taxable benefits offered by the plan (hence the term “cafeteria plan). Back to Top
Exactly What Benefits can be offered as part of a Cafeteria Plan?
The allowable non-taxable benefits include both premium only and flexible spending account benefits.
| PREMIUM ONLY BENEFITS | FLEXIBLE SPENDING BENEFITS |
| Health Insurance | Dependant Programs |
| Accident Insurance | Assistance Programs (day care) |
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Group Term Life Insurance |
Medical Reimbursement |
| Disability Insurance | (out of pocket medical costs) |
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Vision Care Insurance |
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Cancer Insurance |
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| Intensive Care Insurance | |
| Hospital/Surgical Insurance |
A plan can offer some or all of the allowable benefits. You, the Employer, choose which benefits you want to make available to your employees. Your employees, in turn, select the benefits that most suit their needs. Back to Top
What type of plans are available?
The simplest plan is a PREMIUM ONLY PLAN (POP).
In a POP the only benefits offered by an employer are insurance products such as employee health/HMO, dental, term life, cancer, accident/intensive care, hospital/surgical or disability. The employer selects the benefits that will be offered to his employees on the “menu of benefits”. Each employee then chooses which benefit(s) best suit his needs and pays for the benefits he has selected with pre-tax deductions from his paycheck. The insurance carriers simply bill the employer for the premiums due, which are deducted from the employee’s paycheck before taxes. There are no claims to file and this type of plan is easily understood by the employees.
The FULL Plan with flexible spending accounts will increase the benefits offered to the premium only plan by adding (1) un-reimbursed medical expenses and (2) dependent care expenses. Each employee estimates expenditure for his entire family for the cafeteria plan operation year. Then this amount will be deducted, in equal amounts over the plan year from his paycheck before taxes are withheld by the employer. Back to Top
Let’s start with the definition of FSA. Quite simply, it stands for Flexible Spending Account, and can be an indispensable part of your overall benefits program.
Here’s how it works. An FSA is an account your employer sets up so you can pay for a variety of healthcare needs like insurance co-pays, deductibles, even some dental and vision-care costs. But here’s the best part. Your FSA is funded entirely by your pre-tax income. Back to Top
What is a Flex Convenience Card?
The Flex Convenience card allows you to directly pay for your eligible FSA expenses at the point of service. The card allows you to avoid the traditional hassles of of an FSA such as paying cash for services (in addition to your payroll deductions), filling out and submitting a claim form, and waiting for a reimbursement check. Some companies prefer to stay with the traditional method of the FSA claim forms. Our office prefers manual claims. Back to Top
How do I acquire a Section 125 claim form?
Go to the forms section of this part of the site or click here to acquire one in PDF format. Back to Top
