A section 125 cafeteria plan is a unique benefits plan that can provide some. Section 125 plans give your employees the power to choose from different benefits. Essentially, these plans offer employees the option to change their taxable salary into nontaxable benefits before any taxes are removed from their paycheck. A section 125 plan is the only means by which an employer can offer employees a choice between taxable and nontaxable benefits without the choice causing the benefits to become taxable. A town has a cafeteria plan section 125 plan, which offers dependent care assistance. Debit cards allow your employees to instantly access their account balance. If an employer adds or eliminates a benefit option during the middle of the section 125 plan year, affected plan participants may make a corresponding change in their election. Webbased administration for section 125 cafeteria planscore. What if i have questions about administration is there an additional fee. Aug 08, 2016 a section 125 plan is part of the irs code that enables and allows employees to take taxable benefits, such as a cash salary, and convert them into nontaxable benefits. Our sole business mission is to deliver hasslefree, section 125 cafeteria, flexible spending administration. Advanced benefit strategies is an industry leader in flexible spending account administration. Within certain limits outlined in the program, employees can direct their beforetax dollars into three expense areas.
Dec 11, 2017 section 125 plans give your employees the power to choose from different benefits. A section 125 premium only plan pop and flexible spending account fsa, also known as cafeteria plans, can reduce fica, federal, and state and local taxes for your company and employees when combined with your companys group health insurance. These benefits can include health insurance, child care, adoption assistance, life insurance and health savings accounts. Powerflex makes navigating the complexity of benefit plan administration a breeze with our easy to use software suite packed full of functionality enhancements designed to save you dramatically on time, labor, material, postage and other costs. Under this code, employees are allowed to convert a taxable cash benefit salary into nontaxable benefits. We tailor your reimbursement options to fit your companys unique needs. Most flex plan administration software vendors have traditionally priced their product based on how many employees you have. Request for proposal park hill school district section 125 plan administration services. Often, the section 125 plan itself and the summary plan description are provided by a third party administrator, for an annual fee. Section 125 is a written plan that lets employees choose between qualifying benefits and cash. If an employee makes the election before the start of the plan year, and other 125 requirements are satisfied, the employees election of one or more qualified.
A section 125 plan document outlines specific details, such as a description of the employee benefits that are covered through the plan and what they cost. The change in election must be consistent with the event and be made effective going forward. Although there havent been changes to the section 125 regulations since 2007, other laws have impacted the cafeteria plan rules, such as hipaa and the aca, as noted by adps workplace compliance spotlight. Do it yourself cafeteria plan flex spending accounts. About the section 125 plan cafeteria plan investopedia. Section 105 plans are used by employers in a variety of ways. Dont believe the lies about section 125 plans when it comes to benefit administration, section 125 plans can be a challenge for some employers to understand. Section 125 premiumonly plan an irs requirement made hasslefree by healthequity what is a premiumonly plan. An fsa cannot provide a cumulative benefit to the employee beyond the plan year. Our commitment to providing the best possible cafeteria and section 125 plan options for your business makes all the difference. A cafeteria plan allows employees to pay certain qualified expenses such as health insurance premiums on a pretax basis, thereby reducing their total taxable. Powerflex cafeteria plan administration software for third. A section 105 plan allows taxfree reimbursement of medical and insurance expenses, as allowed under section 105 of the internal revenue code irc.
American fidelity currently provides section 125 plan services to more than 400 ohio schools and has been a sponsor of oasbo for over 15 years. A pop is a section 125 cafeteria plan that allows employersponsored premium payments to be paid by the employee on a pretax basis instead of aftertax. Health carethe fsa provides an excellent way for employees to pay for their expenses not. About section 125 accounts section 125 is part of the internal revenue code cafeteria plan. Faqs for government entities regarding cafeteria plans. Powerflex provides cafeteria plan administration software and. A cafeteria plan includes premium only plans and flexible spending accounts is an employee benefits program designed to take advantage of section 125 of the internal revenue code. A section 125 plan is a written plan that gives employees the option to choose between cash and qualifying benefits that are pretaxed. A section 125, or cafeteria, plan meets the criteria of section 125 of the internal revenue code. You can outsource the plan administration work to us through our powerflex tpa third party administration services, or you can opt to selfadminister a wide array of benefit plan designs using powerflex administration software the best of both worlds. Nov 28, 2012 a section 125 plan allows employers to provide their employees with a choice between cash and certain qualified benefits without adverse tax consequences.
All employers want to take advantage of section 125 and hra taxadvantaged healthcare solutions offered by core documents, however some may not want to deal with the day to day issues. Employees will no longer have to wait for reimbursement. A 125 cafeteria plan is a written plan that allows employees to elect between permitted taxable benefits such as cash and certain qualified benefits. Powerflex provides cafeteria plan administration software and section 125 and section 105 plan administration services for employers, third party administrators tpas, and benefits professionals, cafeteria plan administration software, section 125 plan third party administrator software, tpa software for flexible spending accounts, fsa administration software, flexible spending account software. Pretax premium plan services you dont need to worry about handling the administrative aspects of a pretax premium plan, unitedhealthcare will handle it for you and we will provide you with the necessary legal documents and. Powerflex is a unique benefits administration company because we offer both options. A cafeteria plan can limit enrollment in a health fsa to those employees who participate in the employers health insurance plan. The following services are included in our pretax premium plan. Offer your employees more with customized reimbursement plans and exceptional benefits management service at a cost competitive rate. Mar 27, 2019 to be compliant, your section 125 cafeteria plan must meet documentation and communication requirements. A section 125 plan typically prohibits the deferral of compensation. A section 125 plan is a written plan that gives employees the option to.
Diy cafeteria plan administration software for medical expense fsas, hsa savings, hra plans, transit and parking. Datair flexplus 125 cafeteria administration system. Use fiss checklist approach and youll see how quick and simple it is. Benefits outsource has simplified managing your section 125 plan. A section 125 also called a cafeteria plan is a written plan that lets employees choose between certain benefits. One system with everything needed to efficiently propose, administer, and test flexible benefit plans including section 125 fsas, dependent care accounts, hras, hsas, and section 2f transportation reimbursement plans. As an expert in administering the section 125 plan, otherwise known as the cafeteria plan, benefits outsource provide clients with a cost effective initiative for outsourcing their section 125 administration.
For these clients core documents now offers a stateoftheart online portal for section 125, fsa, dcap, hsa, and hra plan administration, plus the added convenience of a debit card for every employee. Answers your questions about section 125 pop plan document in minutes and how to set up section 125 plan. Section 125 is part of the irs code created to make benefit programs more affordable for employees. Section 125 plans are a tax savings employee benefit plan that allows participating employees to direct a portion of their pretax salary to be used to pay for approved premiums, health, dental and vision care expenses and dependent care expenses. Powerflex provides cafeteria plan administration software and section 125 and section 105 plan administration services for employers, third party administrators tpas, and benefits professionals, cafeteria plan administration software, section 125 plan third party administrator software, tpa software for flexible spending accounts, fsa administration software, flexible spending account software, employer accounting for flexible spending accounts, flexible benefits administration software, hra.
American fidelity assurance company is oasbos exclusive benchmark provider for section 125 plan services. Powerflex provides cafeteria plan administration software and section 125 and section 105 plan administration services for employers, third party. Webbased administration for section 125 cafeteria plans. The small employers solution for affordable administration of section 125 plans with fsa, hra benefits.
Dependent care assistance account means the account established with respect to the participants election to have dependent care expenses reimbursed by the plan pursuant to section 4. After completing a single checklist, your plan, summary plan description, and election forms are produced simultaneously. If employees contribute toward the cost of the companys group health, term life or disability insurance, or if they contribute to a health savings account hsa with pretax payroll deductions, a written section 125 plan must be in place. Health plan administrators are section 125 experts. Section 125 fsa, hsa, hra or transit plan cafeteria plan administration software doesnt get any easier than this, and the best part is. Third party administration, cafeteria plan administration. Without a section 125 plan, employee contributions can only be made with after tax dollars. Powerflex provides cafeteria plan administration software. However, there are four exceptions to this general rule.
Learn what a section 125 plan is, how it works, and which benefits qualify. Section 125 plans section 125 plans from paychex can save money for your company and employees. Taxation of irs section 125 and health insurance finance. Irs forms needed to implement a section 125 plan bizfluent. A section 125 plan is the only means by which you can offer employees a choice between taxable and nontaxable benefits without the choice causing the benefits to become taxable. A premiumonly plan pop, or cafeteria plan, is a written plan maintained by an employer for its employees that meet the specific requirements and regulations of section 125 of the internal revenue code. This is why we suggest working with a professional service like a peo, insurance broker, or hr software, to make sure your cafeteria plan is irs section 125 compliant. Fis has everything you need to quickly and costeffectively build a cafeteria plan practice. Most group health insurance providers are unfamiliar with section 125 plans, including its. Under section 125, can an employee make a midyear election change. If youre like other employers we work with, its likely been a while since youve updated your section 125 plan document.
In the case of an insured plan, the maximum amount reasonably available must be determined on the basis of the underlying coverage. A section 125 plan is a valuable tool for both you and your employees. Cafeteria plan fis has everything you need to quickly and costeffectively build a cafeteria plan practice. The cafeteria plan manager is a windows based program allowing the user to perform tasks with the click of a mouse. For example, a common type of section 105 plan is a selffunded or selfinsured health plan, where the employer selffunds or self. It also includes participation rules, annual limits, and election procedures like what constitutes a qualifying event, such as a spouses job loss or a move. This plan allows employees to choose to withhold pretax salary to cover the cost of specific benefits, or to choose between taxable and nontaxable. A section 125 plan is something that the employer must maintain separately from the health insurance policy or any other benefit program that their employees participate in, and the section 125 plan includes a summary plan description, which should be updated annually. A section 125 plan is part of the irs code that enables and allows employees to take taxable benefits, such as a cash salary, and convert them.