125 Cafeteria Plans – It’s Not About What’s for Lunch!

With the continuous rise of health care expenses, employers are looking for ways to help offset them for their employees but also are finding it challenging to provide a budget-friendly health benefits plan.  With options like a Section 125 Cafeteria Plan, it allows employers to give the employee benefits a boost while staying in budget with the bottom line. 

The 125 Cafeteria Plans are an employer-sponsored benefit plan that lets employees pay for eligible health care expenses on a pre-tax basis.  Called a “cafeteria plan” because it is like walking through the cafeteria, selecting the dishes an individual wants to eat, employees can choose the type of health care benefit they want on their “plate” and keep walking past the ones they don’t want to participate in.        

The BASE® 125 Cafeteria Plans allow employers to customize the benefits they offer to their employees, save money, and allow employees who are paying for health care expenses, insurance premiums, or dependent care expenses to do so on a pre-tax basis. 

The BASE® 125 Cafeteria Plans provide access to quality benefits, while providing a variety of affordable benefit options that complement the current health benefits in place. 

Employers can offer one or all four of the following pre-tax options to their employees:

  1. Flexible Spending Account (FSA)
  2. Limited Purpose FSA (LPFSA)
  3. Dependent Care Assistance Plan (DCAP)
  4. Premium Only Plan (POP)

There are 3 rules for cafeteria plans – 1) eligible benefits, 2) eligible employees, and 3) eligible companies.

Eligible Benefits.  The employer’s cafeteria plan can cover one or multiple benefits. 

Eligible Employees.  The benefits the employer decides to implement into the business must be made equally available to employees in the same situation.  For example, but not limited to, employee start date, employee waiting periods, special enrollment periods, and any combination. 

Eligible Companies.  All eligible employees of regular corporations, LLCs, partnerships, sole proprietorships, and anyone owning 2% or less of an S-corporation.

For more information on the BASE® 125 Cafeteria Plans, contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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