|
Section
125 - Premium Only Plans
A
Cafeteria Plan or Section 125 plan is an employee benefit
plan that allows employees to select desired benefits from
their employer's benefit package, "cafeteria" style. The
real benefit of this type of plan is that if set up in accordance
with Section
125 of the Internal Revenue Code, the premiums
can be paid with tax free money. That's right...tax free.
No federal income tax. No state income tax. No Social Security
or Medicare tax.
Most
health insurance policies and some life insurance policies
are eligible for inclusion in a Section 125 Cafeteria Plan.
Group term life insurance is eligible for a portion of the
premium, up to $50,000 of coverage, to be included.
Some examples of
insurance policies that are eligible for your Cafeteria Plan
include:
- Health Insurance
- Dental Insurance
- Cancer Insurance
- Up To $50,000 Group Term Life Insurance on Employees
Only
- Hospital Indemnity Insurance
- Accident Insurance
- Heart Attack & Stroke Insurance
- ICU/CCU Insurance
- Accidental Death and Dismemberment
For
more information about insurance
under Section 125 cafeteria plans,
contact SDSA toll free at 888-698-1429
or email.
Download
Section 125 Forms
Back
Section
125 - Flexible Spending Account Plans
Flexible Spending Accounts (FSA) are
one of the most flexible and beneficial aspects of a Section
125 Cafeteria Plan. With a Flexible Spending Account,
employees can redirect a portion of their pre-tax salary into
a tax free spending account. Employees typically contribute
up to $3,600 per year to the medical plan and up to $5,000
per year for the dependent care plan, depending on the employer's
guidelines. These funds can then be used to pay eligible medical
and dependent care expenses. For more information about eligible
expenses, click
here. Calculate your savings!
Employees should
be aware of a significant restriction on FSA monies. All money
redirected into the cafeteria plan must be used to pay legitimate
expenses during the term of the plan. This means any money
left in the account at the end of the plan year is returned
to the employer. Because of this "use it or lose it"
restriction, it is best to be conservative when enrolling
in an FSA.
For
more information about insurance
under Section 125 cafeteria plans,
contact SDSA toll free at 888-698-1429
or email.
Click
here to view your account on-line and access:
- year-to-date totals by FSA benefit type and plan year;
- remaining balances by FSA benefit type and plan year;
- status and totals of FSA claims you've submitted;
- detailed listings of FSA checks issued to you; and
- cross reference checks to claims.
Download
Section 125 Forms
Back
Section
105 Plans
With the rising
costs of group health insurance, many employers are cutting
costs by either increasing deductibles or decreasing co-insurance
percentages. To ease the financial burden on employees, some
employers are self-funding special tax free accounts to cover
a portion of employees' out of pocket medical expenses.
This is done through the use of a Section
105 HRA plan coupled with a high deductible group health
plan. The employer also benefits because funds directed into
the HRA are treated as business expenses rather than salaries
saving FICA and unemployment taxes.
An IRS
Section 105 Health Reimbursement Arrangement (HRA) is
an employer funded tax-free rollover medical spending account.
HRAs have been around for a while and are enjoying a new found
popularity since the IRS
issued new guidance on the plans in June 2003. This
guidance allows funds remaining in an HRA account at the end
of the plan year to rollover tax-free to the next year.
For
more information about insurance
under Section 105 plans,
contact SDSA toll free at 888-698-1429
or email.
|
Products
& Services
