A cafeteria plan allows participants to choose among two or more benefits consisting of cash and qualified benefits. Cafeteria plans are governed by Section 125 of the Internal Revenue Code providing some real tax savings and increase take-home pay for your employees. In short, it allows employees to pay for qualified benefits with pre-tax dollars, or in other words, premiums are withheld from their pay prior to the calculation and withholding of federal income taxes (FICA and FUTA).
Qualified benefits include:
- Employer-provided accident and health plans
- Group-term life insurance
- Dependent care assistance programs
- Adoption assistance programs
Once a participant has made an election and benefits have started he/she is not allowed to make an election change unless the change constitutes a "special enrollment" as defined by HIPAA or a by the Code approved "Change in Status".
Murfee Meadows provides services to assist employers with the administration of cafeteria plans; from the simplest POP Plan to Flexible Spending Account administration. Contact us to take advantage of this often overlooked employee benefit.