Other Employee Benefits Flashcards
Section 125 cafeteria plans
- permits employees to choose the employee benefits they want from a list provided by their employer
- must include a cash option: receive cash in lieu of benefits for equal value
Cafeteria plan example choices
- term life equal to 2x salary
- medical insurance for employees
- short or long term disability insurance
- 401k arrangement
Flexible Spending Accounts (FSAs)
- cafeteria plan
- cannot discriminate
- 2 types: medical and dependent care
- reduce income to allocate to plan
- reductions are not subject to tax
- submit receipts for reimbursement
Health FSA
- used to pay for medical expenses not covered by insurance
- deductibles, co-pays, coinsurance, dental, vision, prescription, otc
- 2023 limit $3,050
- 2 1/2 grace period or $610 rolling balance
Dependent Care FSA (DCFSA)
- 2023 limit $5,000, for tax free reimbursement
- both spouses need to earn income for it to be taxable. unless nonearning spouse is disabled or student
- if one spouse earns less than 5k, the benefit is limited to the amount the do earn
DCFSA eligible expenses
- under 13 or any age dependent that cannot care for themselves mentally
- placement fees, before and after school care, incapacitated adult with you 8hrs/day, day camp, nursery school, private sitter, late pick up fees, housekeeper with caring, summer camps, activities in lieu of day care
not eligible for reimbursement
- tuition and fees
- 13 +
- late payment fees
- overnight camp
- services not yet provided
- field trips
- transportation to care
FSA coverage period
- ends when the plan year ends or when employee coverage ends
FSA - Advantages
- annual contribution is available at start of plan year
FSA - Disadvantages
- any money left unspent is forfeited
The Tax Relief Act of 2001
- Fringe benefit
- employee and spouse may exclude from income the value of retirement planning services provided by employer in maintaining their qualified plan
Fringe benefits - tax free
- premiums employer pays for health
- insurance premiums employer pays up to 50K DB
- day care services
- company car
- commuter pass (300/mo cap)
- parking (300/mo cap)
- company discounts
- meal money, cab, theatre, sporting
- discounts on services limited to 20%
Fringe benefits - taxable
- health insurance premiums paid for self employed, partners, 2% owner, S corp. - it is deductible
- employer paid insurance premiums on group life in excess of 50k of DB if plan is nondiscriminatory
Voluntary employee’s beneficiary association (VEBA)
employers may establish VEBA to fund certain benefits for its members
- death benefits
- disability benefits
- legal expense
- unemployment
- child care
- severance
- education
contributions within limits are deductible to employer
Prepaid legal services
- employer funded plan that makes legal services available to employees
- deductible to employer
- taxable as compensation to employee
Group LTC insurance
- not a qualified benefit under a cafeteria plan
- HSA can pay
