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What is a Flex Plan or Cafeteria Plan? Sometimes
referred to as a flex plan, cafeteria plan or a Section 125c plan, a Flex Plan is an employee benefit plan that allows employees
to pay for certain benefits with pre tax dollars. These pre tax dollars are set aside each pay period to purchase benefits
such as group health insurance, life or dental insurance, short or long term disability insurance, dependant care reimbursements
and medical reimbursements. The employer also benefits with a flex plan as each dollar that is run through the plan
on a pre-tax basis avoids FICA and SS tax, thus the employer is able to save 7.65% on the amount that is run though the plan.
What benefits can an employer include in a Flex Plan? HSA Contributions: Cafeteria Plans can be setup to allow for pre-tax HSA contributions to
be made to each individuals HSA account. This not only saves the employee tax dollars it also saves the employer tax
dollars by reducing the amount of FICA and Social Security taxes they must pay. Ask us how to setup a pre-tax HSA
beneift for your Cafeteria Plan.
Employee-paid insurance premiums: Payroll deducted
health insurance plan premiums and other employer-sponsored insurance coverage, including dental, disability and group-term
life insurance premiums.
Medical expenses not covered
by insurance: Typical expenses include eye exams, eyeglasses, contact lenses and solutions, dental visits, orthodontic
care, medical exams, mental healthcare, chiropractor visits, prescriptions, co-pays and deductibles.
Adult and child daycare expenses:
The cost to care for a dependent while the employee and, if married, spouse work.
Adoption expenses: Qualified
adoption expenses include those fees and related expenses incurred for the adoption of a qualified child.
. Who can sponsor a Flex Plan? Regular corporations, partnerships, S
corporations, limited liability companies (LLCs), sole proprietors, professional corporations and non-profit organizations
can all save money on taxes by establishing a Flex plan. Note that 2% or greater shareholders of S corporations are
not eligible to participate in Flex Plans. . Plan
Design and Administration . Simply call Jablonski-Madill, Inc. and we’ll walk you through the process. - We will meet with you and review your current plan document, answer your questions and give you suggestions
to customize your plan, helping maximize employee participation and savings.
- We will conduct on site enrollment meetings for your employees, assist with enrollments and stay
for a question and answer session.
- We
will provide account management by providing account balance, claim adjudication and claim payment by check or direct deposit.
- Our administrative services also
include discrimination testing, quarterly account statements to all participants and annual reports to the employer.
Our service agreement provides a detailed explanation of the service we provide on an annual basis.
To learn how your organization can benefit
with a Cafeteria Plan, Contact Us.
Example of Employer Annual Savings
ABC Company has 15 employees |
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Unreimbursed Medical Expenses |
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Dependent Daycare Expenses |
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* based on insurance premiums averaging $200 per month per employee
** based on
10 employees contributing an average of $60.00 per month
***based on 5 employees contributing an average of $200
per month
Example of Employee Savings Per Pay
Period
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$1,500
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-125
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1,375
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-275
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Social Security Tax (7.65%) |
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-105
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$995
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Out of pocket medical expense |
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-125
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$870
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Reimbursement from flex plan |
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125
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$995
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Net savings with flex plan |
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35
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$910
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Savings will vary depending on specific tax situation. Social security payments could be affected.
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