Section 125

Cafeteria plans aren’t just for food choices. Section 125 is also called a “cafeteria plan” because it allows you, the employer to provide health care benefits for your employees, specifically a flexible spending plan. This plan allows employees to pay for certain medical expenses on a pre-tax basis which in turn, lowers their taxable income thus paying less taxes and therefore allowing them to take home a bigger pay check.

And, of course, there are also benefits for you, the employer. By having a flexible spending plan in place, you save the matching 7.65% (FICA) on every dollar that an employee runs through a Section 125 plan. You may also realize other benefits.

• A Section 125 helps you control your company’s share of medical costs without limiting employee choices.
• A Section 125 addresses the needs of a diverse workforce by allowing you to offer individually tailored benefits at little or no additional cost to your company.
• A Section 125 is viewed as a big positive by both current and prospective employees because you offer a benefit package with the employee’s interests in mind.
• A Section 125 (depending on your particular state) may also be a workers’ compensation tax savings for you.

A Section 125 plan has no limit on contributions by either the employee or the employer; it covers dependent care, transportation costs, and has no medical insurance restrictions. Call Kittelson Insurance Agency today and we’ll help you set up your money-saving, medical plan.