cafeteria plan

(redirected from Section 125 Plans)
Also found in: Medical, Financial.

cafeter′ia plan`


n.
a fringe-benefit plan under which employees may choose from among various benefits those that best fit their needs up to a specified dollar value.
[1985–90]
References in periodicals archive ?
Here are five things to know about HSAs and Section 125 plans.
The NAHU LTC finance proposal calls for the government to let taxpayers use the money inside Section 125 plans, 401(k) plans, 403(b) plans and individual retirement accounts (IRAs) to pay for LTCI.
Its payroll services include payroll processing, payroll tax administration and employee pay services; and its human resource services include 401(k) plan record keeping, section 125 plans, a professional employer organisation, time and attendance solutions and other administrative services for business.
Paychex's human resource services include 401(k) plan recordkeeping, section 125 plans, a professional employer organization, time and attendance solutions, and other administrative services.
Section 125 plans also allow employees to make before-tax contributions to personal spending accounts that can be used for qualifying health-care or child-care expenses.
In three states, Mark Hall studied the use of section 125 plans to allow tax-free premiums for individuals to purchase insurance who work for small employers.
Section 125 plans also may be used to pay health insurance premiums.
Cafeteria plans, also described as "flexible benefit" plans or Section 125 plans, allow participating employees to choose between a number of non-taxable qualified benefits or taxable cash.
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.
Section 125 plans benefit employers by reducing various payroll-related employment taxes, thus reducing payroll costs.