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Choosing A Cafeteria Plan For Your Business

The right health plan helps you recruit and retain employees, linking their interests to yours. The result? A happier, more dedicated, and healthier workforce.

Cafeteria Plans are an affordable, flexible, and popular way to offer group health insurance to your employees. A Cafeteria Plan allows your employees to choose from an assortment of benefit options. So each employee gets the kind of coverage they need.

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Meeting A Variety Of Needs

Also known Section 125 Plans (after part of the tax code), Cafeteria Plans are popular because they allow your employees to pay for medical expenses with pre-tax dollars. That means they save on their Federal and state taxes. Your employees can also set aside pre-designated amounts during the year to pay for medical expenses that aren’t already eligible for coverage. Money can be set aside in a Flexible Spending Account, or in a Health Savings Account.

Important facts about Cafeteria Plans:

  • Your employees can only use money from Flexible Spending Accounts for healthcare related purposes.
  • Flexible Spending Accounts are essentially “use it or lose it” — the money deposited has to be used before the year's end. The money in a Health Savings Account rolls over from year to year.
  • The participants in your Cafeteria Plan must be employees.
  • There are no funding limits on Cafeteria Plans.
  • The amount set aside for your Flexible Spending Account will be exempt from income, payroll, and unemployment taxes.

The Power of Choice

Most cafeteria plans are designed to address your employees’ life, health, and disability insurance needs. Employees can also purchase additional life insurance coverage for their dependants. And they can take advantage of non-traditional benefits, including plans that provide access to legal advice and counsel.

Setting up a Cafeteria Plan can be complicated — so working with a professional insurance agent makes good sense. When you're ready to start talking to agents, use our free group insurance quote service. With one simple form, you'll get free quotes from competing agents.

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