Section 125 Cafeteria Plans (Flexible Spending Accounts)

A Section 125 Cafeteria Plan, often referred to as a Flexible Spending Account, lets employees keep more of their paycheck by reducing Federal and state taxes. Specific pre tax expenses may be deductible and eligible expenses include days, insurance premiums and many out-of-pocket expenses for medical costs.

About the Plan

The Section 125 Cafeteria Plan is so named as it is pursuant to the United States Internal Revenue Code Section 125. Like being able to choose different items in a cafeteria, the plan allows employees to select from two or more options consisting of cash or qualified benefits plans. Added to the IRS Tax Code in November 1978, Cafeteria Plans were created as a diversified workforce meant that a singular service was no longer comprehensive enough.

Due to the flexibility of the employee benefits in a Section 125 Cafeteria Plan they became known as Flexible Spending Accounts. Giving employees benefits such as health insurance, group-term life insurance, or supplemental insurance such as vision or dental. Employers find Flexible Spending Accounts attractive for their tax savings advantages, and the tax savings their employees receive.

By allowing the cost of Flexible Spending Accounts to be omitted from income to be taxed, these accounts have many benefits, and cover a large variety of treatments, resources and expense reimbursements to give employees the options that they need, regardless of their stage in life.

In Las Vegas, Nevada West Business Insurance agents  have the knowledge and expertise to explain all of your options and help you make the right choices for your company and employees.

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