BASE^® Blog

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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For many years, employers have found ways to support their employees’ health care needs.  With each year, and in response to new market needs and challenges, new health benefit plans have been created.  The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is no exception.

Many small employers find that a group health plan is too big of an expense to provide for their employees.  So, what could they do?

The QSEHRA has been around since 2017, but many small employers, with less than 50 full-time employees, do not know much about them. 

How did we get here?

In the 1970s, employers turned to medical reimbursement plans to help alleviate some of the financial burden of health-related expenses to their employees.  In 2002, the IRS published a notice that created the HRAs we know today.  They are owned and funded by the employer, helping employees to pay for their qualified copays, deductibles, prescriptions, and other eligible out-of-pocket expenses not covered by the group health plan. 

The introduction of HRAs was a great way for the larger employers to support their employees, but for the smaller employers who had problems affording a group help plan, it wasn’t a great way at all.  Many employers were left to either purchase a group health plan and struggle to afford it or not provide employees with relief needed when it came to health care expenses.

In 2010, the Affordable Care Act was enacted, taking it one step in the right direction, but we weren’t quite there yet.  In 2017, the 21^st Century Cures Act was enacted giving certain employers the option to offer the QSEHRA. 

The QSEHRA lets employers with less than 50 full-time employees offer health benefits without offering a group health plan.  The employer decides the benefit amount to offer, up to the current approved limit set by the IRS, to reimburse the health care expenses incurred by their employees. 

The BASE® QSEHRA allows employees to secure their own health care insurance on or off the Marketplace and to pay for their health insurance premiums and eligible out-of-pocket health care expenses. 

It may have taken a few years to get to where we are now, but as the health care industry continues to evolve, so will the health benefits products and services to help employers provide their employees with an attractive tax-advantaged health benefits plan to pay for their health care expenses.

For employers who seek to offer their employees health benefits, the QSEHRA is a beneficial Health Reimbursement Arrangement.  Contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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