Creative Results Unlimited is now offering
Cafeteria Plans
A Cafeteria Plan is one of the most underrated and underused employee benefits available for businesses today. A Cafeteria Plan, or a section 125 plan as outlined in the U.S. tax code, allows employees to withhold a portion of their salary on a pre-tax basis to cover certain qualified medical expenses for themselves and their dependents.
Major Benefits:
For the Employee - Tax savings on amounts paid for qualified medical and
dependent care expenses. Employees may receive a greater deduction on dependent
care expenses than a traditional tax credit.
For the Employer - Payroll tax savings on amounts deducted pre-tax. It can also help with recruitment as a valuable addition to your benefits package
There are many unique plan designs available under Cafeteria Plans but there are three very distinct ones to be aware of:
1. Premium Only Plan (POP). POP plans allow employees to
elect a portion of their salary to pay for their premium contribution on a
pre-tax basis. Many employers are doing this already but please note that
it is a violation of tax laws to do so unless you have a POP document in place.
2. Flexible Spending Accounts (FSAs). An FSA allows an employee
to fund certain medical expenses on a pre-tax basis through salary reduction
to pay for out-of-pocket expenses that aren't covered by insurance (for example,
annual deductibles, office co-payments, prescriptions, over-the-counter drugs
and orthodontia). The average working employee in America spends more than
$1,000 annually on these types of benefits. By participating in a FSA, an employee
can pay these costs on a pre-tax basis. Please note, employees contributing
to an HSA account are limited to reimbursement of dental and vision expenses
only.
3. Dependent care flexible spending accounts. The dependent
care FSA is an attractive benefit for employees who pay for child-care or long-term
care for their parents. Many employees don't take advantage of this benefit
and may be unaware of the significant tax savings. Employees elect $5,000 annually
of their pre-tax salary for dependent care expenses, which include expenses
they pay while they work, look for work or attend school full time. Qualified
dependent care expenses may include--but are not limited to--the care of a
child under the age of 13, care for aging parents, care for a disabled spouse
or a dependent incapable of caring for himself, and summer day camps. By paying
for dependent care with pre-tax dollars, employees can save approximately 20
to 40 percent on their child-care expenses.The best part about the Section 125 plan is that most employees are already
paying for these expenses out of their own pockets with after-tax dollars.
Cafeteria plans offers a remarkable way to save money for common expenditures.
Things to be aware of regarding Cafeteria Plans:
- Employees risk losing unreimbursed money at the end of the year – this
is a “use it or lose it” plan.
- There is a potential risk to the employer if medical expenses are reimbursed and an employee terminates prior to the full elected amount being deducted from their paycheck. For this reason, we suggest a limit on the medical portion of the plan.
- Dependent daycare cannot be claimed for reimbursement until deductions have been taken, so no risk to the employer exists for this category, but does so for an employee.
- Owners of S Corporations, partners of LLC’s and Sole Proprietors are not eligible to participate.
COBRA Administration
Creative Results Unlimited is proud to announce that we are ready and able to be your COBRA Administrator following the passage of the American Recovery and Reinvestment Act of 2009 that drastically changed COBRA.
Let us take the COBRA burden off your back!
10 reasons why you should outsource your COBRA administration:
- Non-compliance fines can be costly ($110 per day, per individual, per incident, plus legal fees)
- Legal compliance made simple
- No manuals to purchase or update
- Easy tracking of former employees
- Your staff can concentrate on more productive work
- Provides precise and impartial COBRA settlement
- Reduces company overhead costs
- Tight management minimizes the high cost of claims typical of the COBRA population
- We have the technical details mastered
- You probably have better things to do!
Our program will keep you compliant with all COBRA regulations and provides a complete turnkey service. Let Creative Results take care of all the hassles COBRA creates. We send out ALL COBRA notifications, including initial notifications, qualifying events, and termination notices. Creative Results will also provide excellent telephone and email support, handle billing and premium changes, coordinate with you during open enrollment, send out late notices, and stay up-to-date with all legal and compliance requirements.