A CAFETERIA PLAN MAY INCREASE YOUR TAKE-HOME PAY
A Cafeteria Plan reduces your taxes and could enhance your benefit package. How? By allowing you to pay for certain benefits such as:
- Employee contribution toward group or individual medical insurance premiums.
- Daycare for a dependent child, disabled spouse or dependent parent.
Before taxes are taken out of your paycheck, money you normally use to pay taxes can now pay for your family's increased benefits.
Your employer can provide financial protection for your family with additional supplemental health or life insurance. Depending on your personal situation, you can receive these additional benefits and still realize an increase in spendable income.
Our program is intended to assist an employer in establishing a Cafeteria Plan that qualifies under Section 12S of the Internal Revenue Code. This qualification means you are entitled to pay for selected benefits with pre-tax salary dollars.
What does that mean to you? It means you only pay taxes on the amount of your income after these benefits are paid.
MEDICAL INSURANCE PREMIUMS IRS CODE SECTION 106
Examples of premiums that can be paid with pre-tax salary dollars:
- Group Health Insurance
- Group Term Life Insurance Up to $50,000
- Individual Health Insurance billed through employer
- Accidental Death & Dismemberment
- Disability Income**
- Cancer Insurance
- Supplemental Health Insurance
- Vision Insurance
- Dental Insurance
- Accident Only Insurance
- Intensive Care Insurance
**Use caution when including disability or salary insurance policies since this could make benefits taxable at the time of a claim.
UNREIMBURSED MEDICAL EXPENSES IRS CODE SECTION 105
Unreimbursed medical expenses that can be paid with pre-tax dollars are:
- Group medical and dental insurance plan deductibles.
- For unreimbursed medical accounts, the full annual elected amount will be made available to an employee upon submission of a qualified claim.
- Out-of-pocket expenses not covered by your major medical insurance plan such as birth control pills, braces, chiropractors, crutches, dental fees, prescription drugs, eye glasses (including examination fees), insulin, routine physicals, wheelchairs and x-rays to name a few.
PLEASE NOTE: Combinations of pre-tax insurance programs may have tax ramifications if reimbursements received exceed IRS Code Section 213 eligible expenses.