With a considerable portion of operating budgets going toward employee-related expenses, it seems logical to look for ways to control those costs. That is why businesses today view Human Resource cost containment as an important part of their business model. The IRS Section 125 Cafeteria Plan, also known as a Flexible Spending Account (FSA), offers a simple method of reducing employee costs as well as costs to the employer.

The Bentley, Yates Cafeteria Plan is both IRS approved and qualified.

An IRS Section 125 Cafeteria Plan is not related to any other benefit plan now in place. It does not affect or change coverage's under existing plans.

What does the IRS Section 125 provide?

The Cafeteria Plan, or FSA, provides that certain employee expenses can be paid with pre-tax dollars. The allowable expenses are taken out of the employee's salary and returned to the employee without any tax or FICA contributions deducted from that amount. This results in increased take home pay for the employee and reduced payroll taxes for the employer.

To better illustrate this savings, an example has been provided below. In the example, the employee contributes $300.00 to the FSA for insurance premium, $25.00 for dependent care, and $75.00 for various other eligible unreimbursed medical expenses.

EMPLOYEE SAVING

Take Home Pay Increase:   $142.60  per month or  $1,711.20  per year.

EMPLOYER SAVINGS

Annual Employer Savings for EACH Participant is:  $607.20

Bentley, Yates will, at no charge, produce a feasibility study that will illustrate the impact of such a plan for your company. A few things we will discuss include:

Debit Cards

With the use of the Bentley-Yates sponsored Benny™ Prepaid Benefits Card, employees will no longer have to wait on their FSA money. Rather than having to fill out claims forms and waiting on manual checks, Participants will receive preloaded debit cards giving them instant access to their funds at the point of service, eliminating the need for employees to pay cash for eligible expenses and without having to submit a Claims Form. The Employee will be able to monitor his/her spending by logging on to a dedicated web site. Read more about this advanced service here!

What Are the Advantages?

To The Employee:

The Bentley, Yates Cafeteria Plan provides the means for employees to deduct IRS allowable medical, childcare, and adult care costs.

•  Substantial Financial Benefits

Employees enjoy added benefits for themselves and security for their families without any reduction in take home pay.

•  Increased Retirement Benefits

Employees are shown the advantage of using tax savings to provide additional retirement income for themselves and their families.

•  Fully Vested From Day One

To The Employer:

No matter the size of your Company , you can take advantage of your rights to benefit under Section 125 and establish a Cafeteria Plan.

•  Immediate Payroll Savings

For the average employer the savings are 13%. Using the national average, this savings totals approximately $500 per participating employee per year.

•  Increased Employee Morale

Providing a substantial financial benefit package strengthens morale. The Cafeteria Plan greatly enhances benefits without incurring costs.

•  Improves Employer Image

The employees receive a substantial financial benefit package sponsored by the employer with no cost to either employer or employee.

What types of Cafeteria Plans are available?

Bentley, Yates offers three types of Cafeteria Plans:

A successful Employee Benefit program must be profitable for both the employer and for the employee, and our programs are designed to be a win-win for everyone involved.

Flexible Spending Accounts give employees the opportunity to pay for eligible medical and dependent care expenses on a tax-free basis. Contributions are made before federal income taxes, Social Security taxes, and most state income taxes are calculated.

Tax-Free Insurance Premiums Plan

Employees can use tax-free funds to pay for group insurance premiums offered by their employer, including:

Dependent Care Account

Employees can use tax-free dollars to pay for dependent care, which enables employees and their spouses to work, look for work or attend school full time. The federal government has an annual limit of $5,000 per year for contributions to dependent care FSAs. It is called dependant care and not childcare because it can also be used for a disabled spouse or care for an elderly parent or relative.

Unreimbursed Medical Account

Employees can pay for a wide range of out-of-pocket medical expenses with tax-free dollars. The list of eligible expenses is ever changing. The IRS have provided a definition, it says that "any purchase that has the purpose of preventing or alleviating pain, sickness or injury" is considered an eligible medical expense. A few examples include:

We have compiled a list of eligible out-of-pocket medical expenses which is available from our Participants Download Services or by clicking here. This list is by no means complete.

The Bentley, Yates administration of your Cafeteria Plan also includes Section 131 at no additional charge. The following describe what is included in Section 131:

Private Insurance Premium Account

Employees can pay for any insurance premiums that do not go through any company's payroll system. The only premiums not allowed are: Long-term Care, Casualty Insurance, and Individual Life Insurance policies.

Public Transportation Account

Employees can pay for public transportation, up to $2,760 per year, with pre-tax dollars, including:

Parking Account

Employees or their spouses responsible for paying to park while at work can do so with tax-free dollars up to a maximum of $2,760 per year.

Enrollment

Your employees meet in groups with our experts where the program is explained to them. The benefits are explored, and the IRS allowable deductions are detailed and discussed. At these meetings, enrollment forms are filled out under the guidance and supervision of our experts. Questions are invited and answered. These meetings last approximately 45 minutes to 1 hour.

Relevant links to more FSA Information

Section 125: Employers Win, Employees Win, Agents Wim.
Article by Jørgen K. Christiansen, President of Bentley, Yates & Co.
on this web site

USA Today news article:
http://www.usatoday.com/money/perfi/columnist/block/2003-09-29-ym_x.htm

IRS: "Over-the-Counter Drugs To Be Covered by Health Care Flexible SpenIding Accounts" :
http://www.irs.gov/newsroom/article/0,,id=112623,00.html

FAQs for government entities regarding Cafeteria Plans:
http://www.irs.gov/govt/fslg/article/0,,id=112720,00.html

Child and Dependant Care Credit:
http://www.irs.gov/taxtopics/tc602.html

WikipediA definition, includes several links to IRS sites
http://en.wikipedia.org/wiki/Flexible_spending_account

About the 2.5 month grace period:
http://www.ustreas.gov/press/releases/reports/n0542.pdf

Other relevant Links:
HRA Information
COBRA Information

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