Section 125: Cafeteria Plans
Gordon Analytic offers three different Section 125 plans. We have premium only plans, flexible spending (FSA) plans and cafeteria plans.
- Premium-only plans: This is the most basic Section 125 plan. Employees can pay for health insurance benefits on a pre-tax basis, thus lowering their taxable income.
- Flexible spending accounts (FSAs): This alternative is similar to the premium-only concept. Flexible spending accounts are a means for the employees to pay for certain out-of-pocket health care or dependent care costs on a pre-tax basis.
- Cafeteria plans: This is the most complex alternative because it changes the way employees receive benefits. Instead of providing a determined set of health insurance benefits, each employee is given an amount of "benefit dollars" roughly equal to the employer's expenditure for that person's insurance benefits. The employee then chooses from a "menu" of benefits and determines those that best fit his or her needs.
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