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an overview of IRS Section 125 PlansHow our Beniversal® flexible benefit plans workIRS Section 125 Plans 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. Eligible medical expenses may be paid for with a Beniversal MasterCard® card or be reimbursed by submitting a claim form. There are several types of Section 125 plans: Tax-free Insurance Premiums PlanEmployees can use tax-free funds to pay for group insurance premiums offered by their employer, including:
Beniversal Medical Flexible Spending AccountEmployees can pay for a wide range of out-of-pocket medical expenses with tax-free dollars. Eligible expenses include:
See a list of some eligible over-the-counter items. Employers set the annual limits for employee contributions to medical FSA accounts. Beniversal Dependent Care Flexible Spending AccountEmployees use tax-free dollars to pay for dependent care that enables employees and their spouses to work, look for work or attend school full-time. Eligible expenses include day care or after-school care for a child under the age 13 or care for a spouse or adult dependent who is physically or mentally incapable of self-care. The federal government sets the annual limit for contributions to dependent care FSAs. It is currently $5,000 per year. Flexible Benefit PlansAnother option within IRS Section 125 Plans is to offer "benefit credits" which employees can use to purchase certain benefits. Benefit credits can be structured so that employees can purchase certain core benefits to deposit into Flexible Spending Accounts, to buy other insurance coverage or even to be paid in cash. These are customized programs; contact us and we will consult with you about setting up a plan that fits your specific needs. The Mechanics of Tax-Free AccountsEmployees wishing to enroll in a flexible benefit plan calculate how much money they wish to have deducted from their paycheck before taxes are calculated. This is done annually during the open enrollment period, or when an employee first joins your company. We provide Return-on-Investment Worksheets for employees to calculate their spending, or they can go online and visit our Tax Savings calculators. The employer sends the payroll records and employer funds to Benefit Resource, which uses them to pay qualified Beniversal MasterCard charges or to reimburse employee claims via a check or directly into an employee bank account. Simple EnrollmentWe can easily walk you through our enrollment process. We will provide forms that employees can fill out. You transfer payroll data to us once and then you're done—we handle the rest. Using their Member I. D., employees can go online any time to see the status of their accounts. Questions about Section 125 Plans? Contact us. |
Enrolling in an IRS Section 125 Plan can provide employees and employers with significant financial benefits.
Savings on medical expenses The average employee, setting aside $950 a year for tax-free medical expenses, saves as much as $380. If your company has 100 such employees, you will save $7,268 in FICA expenses.
Savings on dependent care expenses The average employee, setting aside $4,500 a year for tax-free day care expenses, saves as much as $1,800. If your company has 100 such employees, you will save $34,425 in FICA expenses. Leverage consumer-driven health care Take advantage of Beniversal Health Reimbursement Accounts and Beniversal Health Savings Accounts for even greater savings.
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