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Cafeteria Plans
With health care costs spiraling out of
control, the need to supplement health care coverage with
added benefits is quickly becoming a way of work/life for
many employers and employees. Cafeteria Plans are the perfect
solution for coping with the high cost of medical and dependent
care. Whether you're an employer looking to offset benefit
cutbacks, a consultant, or insurer searching for that perfect
solution to help bridge the gap, we can offer you an affordable
Cafeteria Plan solution that both employers and employees
will appreciate.
A 125 Cafeteria Plan allows employees to
pay for their employer-sponsored health, dental, supplemental,
and group term life premiums plus set up flexible spending
accounts to pay for medical expenses, dependent care expenses,
and personally owned health policies with before-tax rather
than after-tax dollars. This reduces taxable compensation.
A 125 Cafeteria Plan is a benefit that
both employers and employees will appreciate. Why? Because
this benefit increases employees' take-home pay and reduces
employer payroll taxes. Both the employers and the employees
profit!
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Employees benefit
by paying less tax and taking home more pay
Employers benefit by paying
less payroll taxes
Employers benefit by increasing
the efficiency of payroll dollars . . . by getting more
money into employees' take-home pay without having to
increase their gross pay
Employers also benefit
because a cafeteria plan is the simplest and most economical
form of flexible benefits that can be offered by a Plan
Sponsor
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NovaSys offers four ways to administer
a Cafeteria Plan:
- Premium Only Plan (POP)
- Flexible Spending Account (FSA)
- Full-Flex
Premium Only Plan (POP)
The Premium only Plan (POP) was created
under Section 125 of the Internal Revenue Code. A POP allows
your employees to pay their premiums for employer sponsored
insurance such as health, dental, vision, disability, accident
and group life (to 50,000) on a pretax basis. You can give
your employees a raise, and your company a tax break. Both
the employers and the employees profit!
NovaSys offers the following services
with POP Administration:
- Provide all legal Documents and Administrative
Forms
- Phone Support concerning legal and Administrative
practices of a 125 plan
- Process and Maintain Change of Status
Elections
- Process initial Benefit Election Forms
to initiate records for plan Administration
- Prepare reports for payroll setup for
employee elections
- Process and send Employer Pay Cycle
Contribution Billing Reports to reconcile with payroll
- Perform nondiscrimination test and Provide
nondiscrimination reports to employer, as needed
- Advise Plan Administration of
any known Plan Compliance Issues
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Flexible Spending Account (FSA)
A Cafeteria Plan allows employees to pay
for their employer-sponsored insurance premiums. The employer
may also implement a Flexible Spending Account into the Cafeteria
Plan which allows employees to be reimbursed for expenses
like deductibles, coinsurance, co-pays, prescription drugs,
vision expenses, dental expenses, day care services and privately
owned insurance policies. Even the most comprehensive insurance
policies have out-of-pocket expenses. FSAs can help your employees
save on these expenses.
Similar to a Premium Only Plan, a Flexible
Spending Account permits pretax payment of insurance premiums
and also offers three additional benefits to employees:
Health Flexible Spending Accounts
Employees use payroll withholding of pretax dollars to pay
for a out-of-pocket
medical expenses.
Dependent Care Flexible Spending
Accounts
Employees use payroll withholding of pretax dollars to pay
for work-related expenses
associated with care of a live-in dependent, such as a child
or elderly relative.
Premium Reimbursement Accounts
Allow employees to set aside the costs of premiums with a
private insurance
company on a pretax basis. Premiums are only eligible if the
insurance
policy is carried individually.
Flexible Spending Accounts encompass all
the aspects of a POP plan with these additional value-added
services:
- Case setup/Employee Communication
- Online / Onsite Enrollment
- Claims Submission to DPAS
- Claims Adjudication tailored to employer
schedule
- Payments via EFT or check
- Online Participant Inquiry and reporting
- Online Employer Module and reporting
By implementing an FSA into your Cafeteria
plan you can reduce your employees taxable compensation. You
are also giving employees a way to pay for out-of- pocket
medical expenses, work-related daycare expenses and privately
owned insurance policies.
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Full flex
Full flex is a combination of both a Premium
Only Plan and a Flexible Spending Account. Offering employees
a Full-Flex Plan empowers them the ability to use pretax dollars
towards higher premium costs, medical expenses and dependent
care expenses.
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