Flexible Benefit Cafeteria Plan
A Cafeteria Plan is a written plan in which participating employees can select qualifying benefits from a “menu” of choices. It allows eligible employees to pay for unreimbursed medical expenses, dependent day care expenses and certain employer-sponsored insurance programs with pre-tax dollars.
Compensation Consultants, Ltd. Flexible Benefit Plan is designed to allow an employer to establish a Cafeteria Plan for the benefit of its employees. Employee elections to a Cafeteria Plan reduce the employer’s social security taxes and in some instances, insurance premiums for coverage such as worker’s compensation and disability insurance, that are based on employees’ taxable salaries. The plan also allows the employee to recognize a reduction in his/her social security, federal income tax and (where applicable) state and local taxes.
The Flexible Benefit Plan allows the employee to make an annual election from current compensation to be redirected to a Flexible Spending Account (FSA). The employee’s redirected salary is “banked” either by Compensation Consultants, Ltd. or by the employer in an account maintained for the employee. When an expense is incurred for a qualifying benefit, the employee is reimbursed by Compensation Consultants, Ltd. from the dollars in the “banked” account. These reimbursements also escape federal, social security and (where applicable) state and local taxes.
The Flexible Benefit Plan can include all or any combination of the following: health insurance premiums (the employee portion), medical expenses not covered by insurance; adult and child day care expenses (the cost of care for a dependent while the employee works); and other employer-sponsored insurance coverage, including dental insurance premiums, disability and accident benefits and group-term life (under $50,000) insurance premiums.
Compensation Consultants, Ltd. can design any type of Cafeteria Plan arrangement including Flexible Benefit Plans funded by both employee payroll deductions and employer flex credits. Buying and selling of vacation days, pricing of benefits and Opt Out plans are all plan design features we can offer our clients. Consulting services are provided to determine the type of plan best suited for each employer’s needs.
Why Have a Cafeteria Plan?
- Your employees’ morale will be enhanced.
- Your employees will save money.
- Your company will save money.