Section 125 Cafeteria Plan Administration

What is a Cafeteria Plan?

Section 125 Cafeteria Plans are plans designed to allow employees to pay for certain expenses, such as group insurance benefits, unreimbursed medical expenses, and dependent care costs with pre-tax dollars. This enables employees to choose where benefit dollars are spent. It is one of the few employee benefit plans that allow both the employee and employer save.

Employee Savings

• Tax savings from State, Federal, and FICA- lower taxable income
• Financial planning for medical and dependent care expenses
• Options in choosing benefits
• Enhances morale

Employer Savings

• Monetary savings to the company- save on payroll taxes
• Flexibility in managing rising benefit costs
• Flexibility in benefit options
• Attraction and retention of employees - eliminates matching FICA taxes of 7.65% on every dollar the employee contributes to the plan

We offer three types of cafeteria plans: premium only insurance plans (POP), health flexible spending accounts (HFSA) and dependent care flexible spending accounts (DFSA).

Premium Only Plans reduces the income tax liabilities for the employer and employee by allowing employees to make salary deduction elections to pay their portion of medical insurance costs using pre-tax dollars.

Health Flexible Spending Accounts allow employees to use pre-tax dollars to bridge the gap between out of pocket expenses not covered by health insurance. Examples of eligible expenses include prescriptions, copays, vision costs, and over-the-counter medicines.

Dependent Care Flexible Spending Accounts enable employees to make special pre-tax elections from their paycheck to fund child and adult daycare expenses.

Health Reimbursement Account (HRA) Administration

Health Reimbursment Accounts (HRA) are employer sponsored funds available to employees to use towards unreimbursed medical expenses. Our HRA plans can be tailored to suit your company's needs.

Typically, employees use the allocated money in the HRA account towards expenses deemed eligible by the employer. Deductible and out of pocket expenses as well as copayments, dental and vision expenses are examples of reimbursable expenses. Unused funds can be rolled over for use in future plan years and for other expenses.

Many employers find that if they raise their medical deductible in turn they lower their premiums significantly enough to use part of the savings to reimburse the employee a portion of the deductible.

Advantages of an HRA

• HRAs are available to any size group
• HRAs can be combined with any type of medical plan
• Accounts do not have to be pre-funded; funds are allocated
• Employer retains ownership of account if employee terminates (COBRA eligible)
• Employer increases employee benefits while decreasing cost

Health Savings Account (HSA) Administration

Increasing health insurance premiums puts a severe strain on employers and employees alike. Employers strive to find a solution that will balance the need for lower premiums and better benefits. Health Savings Accounts is that solution.

By offering a HSA plan your company will not only save money on hefty insurance premiums but will be able to offer a competitive health insurance plan to your employees. HSA plans allow employees to set aside tax-free dollars to be used to pay for qualified health care expenses. Not only are contributions tax-free, but so are disbursements for qualified medical expenses. Unused funds roll over from year to year and continue to earn interest tax-free as well.

Employers benefit by having lower insurance premiums and lower payroll and FICA taxes. It's a win-win situation for everyone.

In addition, we provide contribution management for your employee payroll contributions. We are also an answer center for your employees that have questions regarding their account or eligible expenses.

COBRA and HIPAA Administration

Has your company updated your COBRA notice to include the new ARRA subsidy information? Does your company send initial notifications to new employees as required by law? What about conversion and unavailability notices? Is your company in the habit of sending COBRA noticies by proof of mailing? Do you have a written notice of procedures regarding disability extensions and secondary qualifying events?

Never worry about COBRA compliance again!

By outsourcing your COBRA and HIPAA administration to Benefit Coordinators not only will your company be in compliance with the ever-changing rules and regulations, but you can be certain that your employees and their dependents are protected as well. Non-compliance penalties could put your company out of business.

Licensed, Bonded and Insured. Those three words are very important when outsourcing your COBRA administration. Most Third Party Administrators are not insured for the liability in the event of an error under COBRA Administration. Your company may get back a portion of the administration fee if the TPA makes an error, but what about the $1,000,000 medical bill that your company has to pay because of that error? We have the insurance to cover any errors, should they occur.