What to Know About the Section 125 Cafeteria Plan

The way businesses work has drastically changed since 2020 with companies still offering traditional benefits such as 401(k) plans and other health and life insurance, but they are also searching for additional money-saving benefits. 

One way employers can add value is by customizing their benefits and saving money by offering the Section 125 Cafeteria Plan!

The Section 125 Cafeteria Plan is an employer-provided health benefit that allows employees to use pre-tax dollars to pay for qualified expenses.  With a menu of offerings to choose from, employers have a variety of options to choose from that provide savings to both the employer and employee.

With the Flexible Spending Account (FSA), employees can pay for out-of-pocket health care expenses such as copays, prescription drugs, over the counter health care supplies, and more. 

The Limited Purpose Flexible Spending Account (LPFSA) allows employees to pay for eligible dental and vision care expenses while enrolled in a Health Savings Account (HSA) such as glasses, dentist appointments, contact lenses, dental procedures, and more. 

With the Dependent Care Assistance Plan (DCAP), employees can pay for their eligible dependent care expenses while continuing to work such as daycare, preschool tuition, summer camps, adult daycare facilities, and more. 

The Premium Only Plan (POP) allows employees to pay for their portion of employer-sponsored benefit premiums such as health, dental, and vision insurance premiums. 

With the Section 125 Cafeteria Plan, employees can see an increase in their take-home pay with noticeable tax savings.  When employees make pre-tax contributions, it reduces the employer’s share of taxes. 

Bottom line of what employees need to know about the 125 Cafeteria Plans – if an employer offers a Section 125 Cafeteria Plan, enroll in it.  There is no cost to participate, employees can see an increase in their take-home pay, and have money put aside to pay for expected and unexpected health care expenses each year.

The BASE® 125 Cafeteria Plan will help provide access to quality benefits, while providing a variety of affordable benefit options that stand alone or compliment any health insurance plan in place.  These cost-effective benefits strategies help businesses save money and keep employees happy.  For more information on one or all four Cafeteria Plan options, contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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