The 125 Cafeteria Plans have nothing to do with food and everything to do with paying for qualified out-of-pocket health care expenses! As we get closer to October, employers are looking into what health benefits they could be offering to their employees. One of the most overlooked options for any business of any size is one of the four Section 125 Cafeteria Plans.
The BASE® 125 Cafeteria Plan is like a menu of options that allows employers to customize the benefits they offer their employees. They can offer their employees a way to help pay for their health care expenses, insurance premiums, or dependent care expenses on a pre-tax basis. By utilizing BASE®, it will provide access to quality benefits, while providing a variety of affordable benefit options that stand alone or complement any health benefits package in place.
There are four 125 Cafeteria Plans an employer can choose to offer:
- Flexible Spending Account (FSA)
- Limited Purpose Flexible Spending Account (LPFSA)
- Dependent Care Assistance Plan (DCAP)
- Premium Only Plan (POP)
All four options allow for the funds to be transferred on a pre-tax basis, allowing for both the employer and employee to see tax savings.
With the BASE® FSA, the employees can use the funds they set aside to pay for their qualified, out-of-pocket health care expenses. The employee has access to their full annual election on day one of the plan year for an FSA-eligible expenses.
With the BASE® LPFSA, the employees can use the funds they set aside to pay for their qualified, out-of-pocket dental and vision expenses. The employee, who has a Health Savings Account (HSA) in place, can use their LPFSA funds to pay for the dental and vision expenses while growing the funds in their HSA for other health care expenses now or in the future.
With the BASE® DCAP, the employees can use the funds they set aside to pay for their qualified dependent care expenses. The employee can still work and have peace of mind knowing they are establishing funds to help pay for a very significant cost to their family.
With the BASE® POP, the employer does one simple payroll change that allows for the dollars from the employee’s salary to pay for the employee portion of the health insurance premiums. The employee can save 25-50% on those premium costs by paying for their health insurance this way.
Just food for thought… bottom line is this – adding in one, or all BASE® 125 Cafeteria Plans is money savings for both the employer and employee. With BASE®, employees can see a 25-50% savings on every dollar they elect while employers can see savings on FICA withholding tax for every employee that participates. The more your employees elect and save, the more tax-deferred dollars an employer can save in the long run.
For more information on the BASE® 125 Cafeteria Plans, contact BASE® at 888.386.9680 or visit www.BASEonline.com.