Cafeteria Plan

A Section 125 Cafeteria Plan allows employees to withhold a portion of their salary on a pre-tax basis to cover the cost of group health insurance premiums or qualifying supplemental benefit premiums that are part of an employer-sponsored plan, Health Flexible Spending Account (FSA) and/or Dependent Care FSA. You may set up the plan to include just the premium-only plan or all three components.

Section 125 Cafeteria Plan benefits are free from federal and state income tax, which reduces an employee’s taxable income, and the employer also enjoys a reduction in their payroll tax liability.

To be able to withhold any deferrals from an employee’s paycheck, you must have the proper documentation in place. Section 125 of the IRS code requires an employer have a written plan document in place regardless if your plan will cover one or 1,000 employees. 

For more information regarding this coverage, email or call 800-944-7550.

For more information regarding any coverages listed on this site, email or call 800-944-7550. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice to your situation. Request of a quote for coverage does not guarantee that coverage can be provided. Any misstatements or omissions of relevant information from a client can result in a price variation or even declination or rescission of coverage.