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Hanson Benefits Offers Employee Benefits Services And Benefit Administration

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Cafeteria Plans

The Cafeteria Plan is a non-discriminatory employee benefit program designed to take advantage of certain provisions of Section 125 of the Internal Revenue Code. The plan helps your employees save money by allowing them to pay their portion of their medical insurance, dental insurance, vision insurance and other optional benefit premiums with pre-tax dollars. By using pre-tax dollars to pay for qualified expenses, employees increase their spendable income and save taxes. The employees will enjoy the pre-tax savings on income and FICA dollars; the employer will save on the FICA dollars, which when added together for each employee over the course of a year can add up to hundreds of dollars in savings.

Cafeteria plans are also known as "Flexible Benefit Plans", "Section 125 Plans" and "Flex Plans". The IRS divides Section 125 plans into two categories: Premium Only Plans (POPs) and Flexible Spending Accounts (FSAs). POPs redirect, on a pre-tax basis, a portion of the participant's salary to pay for a variety of employer-sponsored insurance premiums. FSAs allow employees to use pre-tax dollars to pay dependent care expenses and medical bills not covered by their insurance. It also includes the same features as a POP. The FSA is a budgeting tool that can help reduce out-of-pocket expenses such as day care, benefit deductibles, and all medically related co-pays.

We provide several options for setting up and maintaining your Section 125 plan. After the plan is in place we will conduct on site enrollment meetings with your employees and provide you with materials to explain the benefits of a Section 125 Plan and how the plan works.

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