cafeteria plan

(redirected from Section 125 Plans)
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ca·fe·ter·i·a plan

(kafe-tē'ri-a plan)
Employee benefit plan that allows a choice between alternative nontaxable benefits.
References in periodicals archive ?
Here are five things to know about HSAs and Section 125 plans.
One of the most popular cost-savings strategies government finance officers use today is the Section 125 plan. According to a 2011 Government Finance Officers Association membership survey, 77 percent of respondents use this strategy, and of that group, 86 percent would recommend these plans to others.
Prior to PPACA, several states sought to capitalize on the tax advantages of Section 125 plans by requiring or encouraging all employers to offer a cafeteria plan for the pre-tax payment of health insurance premiums, even if the employer did not sponsor a group health plan (Hall, Hager, and Orentlicher 2010).
Strategies using Section 125 plans and flexible spending account (FSA) alternatives should also be developed based on the Bedos' annual health care spending patterns, deductibles, and co-payments.
Thirty-three cents of the increase will be used to provide more needed childhood immunizations, the healthcare plan for low-income Hoosiers, smoking cessation programs, and help for small businesses to offer health insurance to their employees; 3 cents for increased Medicaid provider reimbursement rates, 5 cents for other health initiatives, and 3 cents for Section 125 plans (a plan that allows employers and employees to purchase health insurance on a pre-tax basis).
Most Americans rely on their employers for health insurance, so promoting flexible LTC plans to Americans (known as section 125 plans and commonly referred to as "cafeteria," "benefit" or "flex" plans) would be a natural fit for employers.
He said the Department of Revenue is planning to send out letters to employers about how to set up Section 125 plans for employees, and an employer brochure is being put up on the connector's Web site.
Human resource and benefits outsourcing services include 401(k) plan, recordkeeping, workers' compensation administration, Section 125 plans, a professional employer organization and other administrative services in business.
To offset the negative perception of either benefit design changes or employee contribution increases, organizations can add other benefits that are low in cost but valued by employees, such as voluntary insurance and Section 125 plans.
Lizer says as employers search for cost-reduction options there has been increased interest in Section 125 plans, which allow group insurance premiums to be deducted from wages on a pretax basis and flexible spending accounts to be set up with pretax dollars for health and dependent care.
Section 125 plans benefit employers by reducing various payroll-related employment taxes, thus reducing payroll costs.
Also known as premium-only plans (POP), IRC section 125 plans are the most common form of salary reduction plan.