An attractive benefit to both employers and employees, cafeteria plans provide employees with valuable benefits, while increasing disposable income, reducing taxes, and reducing employment taxes. Also known as "flexible benefit plans" or "Section 125 plans," cafeteria plans allow flexible spending accounts (such as dependent care assistance, healthcare reimbursement, out-of-pocket medical expenses not covered by a group medical plan) and insurance premium reimbursement for certain life, medical, and disability insurance group plans provided through the employer.
Hitesman & Wold assists clients in understanding the laws governing cafeteria plans, which are authorized by Section 125 of the Internal Revenue Code and are detailed, complex and sometimes vague. We counsel numerous clients regarding cafeteria plans, including:
- Why have or not have a cafeteria plan
- Using pre-tax dollars to pay for out-of-pocket medical and dependent care expenses
- Benefits that can be offered
- How employees elect and change benefits in cafeteria plan
- Health savings accounts (HSAs)
- Dependent care assistance programs
- Adoption assistance programs
- Premium-only plans
- Related plans not offered under a cafeteria plan such as health reimbursement arrangements (HRAs), medical savings accounts, and qualified transportation fringe benefits
- Who sponsors a cafeteria plan and who participates
- Reporting and disclosure requirements
- Nondiscrimination tests
- How employers benefit from cafeteria plans
- Consequences of not complying with laws governing cafeteria plans
- and more
Hitesman & Wold attorneys also provide seminars and training regarding compliance for cafeteria plans.