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What is a cafeteria plan and how does it work?
A cafeteria plan is a separate written plan maintained by an employer for employees that meets the specific requirements of and regulations of section 125 of the Internal Revenue Code. It provides participants an opportunity to receive certain benefits on a pretax basis.
What qualifies as a cafeteria plan?
A cafeteria plan, also known as a section 125 plan, is a written plan that offers employees a choice between receiving their compensation in cash or as part of an employee benefit. Employer contributions toward an employee’s cafeteria-plan benefits are not taxed.
What is an example of a cafeteria plan?
Common examples of Section 125 cafeteria plans: Premium Only Plans (aka POPs, see Section 125 Premium Only Plan Rules & Regulations) Flexible Spending Accounts (aka FSAs) Contributions to Health Savings Accounts (aka HSAs)
Is my health insurance a cafeteria plan?
A Section 125 Cafeteria Plan is an employer-sponsored benefits plan that lets employees pay for certain qualified medical expenses – such as health insurance premiums – on a pre-tax basis. Typically, they can use the pre-tax money to pay for health insurance premiums, retirement deposits, or other benefit options.
Is an HSA a cafeteria plan?
A cafeteria plan is an employee benefits plan administered under Section 125 of the federal tax code that lets employees pay certain expenses with pretax income. Funding a health savings account, commonly referred to as an HSA, may be an option under a cafeteria plan.
Is a cafeteria plan the same as an HSA?
Is Aflac a cafeteria plan?
With Aflac cafeteria plans, you can reduce your employees’ taxable income, thereby reducing your share of FICA and FUTA taxes. This could mean a savings for you and your employees. The administration of flexible spending account plans doesn’t have to be complicated.
What is the difference between cafeteria plan and HSA?
What do employees get under a cafeteria plan?
Employees of employers with cafeteria plans may obtain such benefits as health insurance, group-term life insurance, voluntary “supplemental” insurance (dental, vision, cancer, hospital confinement, accident, etc.), and flexible spending accounts through the plan.
What are the components of a cafeteria plan?
A cafeteria plan usually involves five elements: flexible benefit credits, minimum levels of certain benefits, optional benefits, cash credits, and tax deferral. In a cafeteria plan, the employer generally allows each employee to spend a specified number of flexible credits, usually expressed in dollar amounts.
What are the advantages of having a cafeteria?
Increased Team Cohesion. Employees that are encouraged to eat together often develop stronger relationships.
What does cafeteria plan stand for?
A “cafeteria” plan, or Cafe 125, allows employees to pay certain expenses with pre-tax dollars. It is known as a cafeteria plan because the menu allows for various options.