BASE^® Blog

Grow Your Business with a BASE® 125 Cafeteria Plan

Spring has sprung, and like anything in spring, all kinds of things have begun to grow.  Why not take this time and help grow your company’s benefits package with a BASE® 125 Cafeteria Plan?

Another thing “growing” this year is the rising cost of health care.  In 2018, there will be a rise in the increase of health care costs, from 4.6% to 5.5%, but with a creatively designed health insurance and benefits package, the rise in employers’ costs may be less than the overall health care inflation.  (Health Premiums Expected to Rise 5.5% in 2018, Driving Cost Management Steps).  By incorporating a BASE® 125 Cafeteria Plan into the business, employers can customize a benefits plan to help their employees with the rising cost of health care and both save money.

The BASE® 125 Cafeteria Plan (a form of Consumer-Driven Health Plan – CDHP) consists of the Flexible Spending Account (FSA), Limited Purpose FSA, Dependent Care Assistance Plan (DCAP), and Premium Only Plan (POP).  These plans allow employees who are paying for medical expenses, insurance premiums, and/or dependent care expenses to do so on a pre-tax basis.

Flexible Spending Account (FSA) – an employee sets aside a specified amount of pre-tax dollars from each paycheck to pay for out-of-pocket medical expenses.  The money is used in paying for qualifying medical expenses, such as co-pays, vision care, dental care, and deductibles.  A full list of legitimate expenses that can be reimbursed can be found under Code 213(d).

Limited Purpose FSA – an employee sets aside a specified amount of pre-tax dollars from each paycheck to pay for dental and vision expenses only.  This plan is for the employers who offer a Health Savings Account (HSA) and want to add additional cost saving measures for their employees.  By limiting reimbursements to only the dental and vision expenses, individuals remain eligible to participate in both the Limited Purpose FSA and HSA.

Dependent Care Assistance Program (DCAP) – an employee sets aside a specified amount of pre-tax dollars from each paycheck to pay for qualifying dependent care expenses.  Qualifying dependent care expenses are considered daycare, preschool, before and after-school care, and elder care.

Premium Only Plan (POP) – this plan allows for employees to pay for a variety of employer-sponsored benefits, such as health, dental, vision, and supplemental insurance premiums with pre-tax dollars, ultimately reducing taxable compensation.

There are numerous benefits to both the employer and employee when implementing a BASE® 125 Cafeteria Plan into the business.  The employer will see financial benefits with the employee’s pre-tax contributions that will reduce the employer’s share of FICA and FUTA taxes, an enhanced benefits package that helps to give the business a competitive edge when hiring, and an option for increased plan participation and savings with more employees participating.  The employees will see increased take-home pay since the funds are transferred from their wages on a pre-tax basis; they will save on federal, state, Social Security, and Medicare taxes.  Employees will see increased benefit savings with the money they have set aside for qualified out-of-pocket expenses.

In a recent study, 90% of larger employers will offer at least one Consumer-Driven Health Plan (CDHP) in 2018 with one focus in mind – enhancing their employees’ experience.  (Health Premiums Expected to Rise 5.5% in 2018, Driving Cost Management Steps).  With a Cafeteria Plan from BASE®, employers can nurture benefit packages that will provide personalization and savings.   

For more information on how a BASE® 125 Cafeteria Plan can help grow an employer’s benefit package, please call BASE® at 1-888-386-9680 or visit the website. 

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When keeping a business in compliance, don’t rely on just your luck to protect the employer from being vulnerable to penalties and audits.   Rely on BASE® to provide you with all of the required documentation to encompass benefits the employer provides into one document to keep business owners in compliance.

The federal Employee Retirement Income Security Act (ERISA) mandates that employers/plan administrators of ERISA-covered plans provide a Summary Plan Description (SPD) to each participant and that plans be maintained in accordance with a written Plan Document.  The BASE® ERISA Wrap is designed to help employers fulfill the ERISA requirements for an SPD and Plan Document.  It applies to virtually all employers who offer or sponsor benefits, regardless of size or number of participants. The only entities that are exempt from ERISA are governmental employers and bona fide church groups.

Many companies mistakenly assume that insurance contracts, certificates of insurance, and benefits summaries fulfill the ERISA requirements – but they do not include the required provisions that protect the plan and the employer.  Failure to provide such documentations within 30 days can result in a penalty of up to $110/day per employee.  So employers shouldn’t leave compliance to chance, because all it takes is just one inaccurate filing, investigation, or complaint, and they could be paying the price.

The BASE® ERISA Wrap allows employers to fulfill the Department of Labor’s (DOL) SPD and Plan Document mandates. Employers, or plan administrators of the group health plans, need to comply with two important requirements or risk the potential penalties:

1. Maintain and distribute Summary Plan Descriptions (SPDs) to plan participants which accurately reflect the contents of the plan and which include specific information as required by law.
2. Group health plans must be administered in accordance with a written Plan Document which must be made available to plan participants and beneficiaries upon request.

Why is an ERISA Wrap so important?  Not only does it fulfill the ERISA requirements for an SPD and Plan Document, but it also provides ERISA required information for employers to provide to their employees.  The ERISA Wrap fills in gaps of information not covered in insurance booklets from insurance carriers.  Some of this information includes: hours an employee must work for eligibility, waiting periods, ERISA plan numbers, guidelines for document distribution and rights of member, and more.

How it works:

• Employer provides plan information to BASE® for all ERISA employee benefit plans.
• BASE® produces all required documentation as established by ERISA.
• BASE® provides and maintains all documentation to employer for distribution to all eligible employees.

What’s next?  Don’t rely on just your luck and pick up the phone.  Call 1-888-386-9680 and speak with a BASE® Account Manager and find out how enrolling in the BASE® ERISA Wrap will provide all the necessary documentation needed to stay in compliance or visit www.BASEonline.com.

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