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November 5, 2004
Cafeteria Plan Advisors, Inc
![](3D"master355_image001.gif")
![](3D"master355_image002.gif")
Cafete=
ria
Plan Advisors, Inc.
420
Washington St
Braintree
MA 02184
800-544-2340
![](3D"slide0021_image004.gif")
![](3D"master354_image005.gif")
![](3D"master354_image006.gif")
A=
bout
Cafeteria Plan Advisors Inc.
Cafeteria Plan Advisors Inc.
nThird
Party Benefits Administrator
nIncorporated
1989
nConcentrate
on IRS Section 125 Cafeteria Plans
nClients:
Municipalities, Corporations, and Non-profit Organizations&#=
13;
Overall Health Care Costs Rising
nPremiums
(Employers/Employees)
q$$ Percentage shifting ER to EE
nCo-pays
(prescriptions/doctor visits)
nDeductibles
nOTC
items
nIndividuals
medical expenses
qFew
meet Adjusted Gross Incomes > 7.5%
What Tools Are Available to Employ=
ers? =
Employees?
nHealth
premium changes
qIncrease deductible
qRepackaging
qShift costs to Employee
nPre-tax
plans as benefits to employees
qCafeteria Plans
qOther Plans
Plans Types
nCafeteria
Plans
qPremium Only Plans
qFlexible Spending Account
nMedical
Spending Account
nDependent
Care Account
nTransportation
Plans
nHRA’s,
HSA’s
Section
125 Cafeteria Plan –
Premium Only Plan
Premium Only Plan
<=
span
style=3D'font-size:70%;display:none'>
nWhat is Section 125?
n
nThe US Congress created Code section 125 in an eff=
ort to
make benefit programs m=
ore
affordable for employees. Section 125 is part of the IRS Code that allows employees to conv=
ert a
taxable cash benefit (sala=
ry)
into non-taxable benefits. Under a Section 125 program you may choose to pay for qualified be=
nefit premiums <=
i>before any taxes are deducted from employee =
paychecks.
n
nThe Premiu=
m Only
Plan is the building block of the
Section 125 Plan. It allows for
certain employee paid group insurance premiums to be paid with pre-tax dollars. <=
/span>
Premium Only Plan
nQualified premiums (if offered by employer) are=
:
q
qHealth
qPrescription
qDental
qVision
qDisability
qEmployee Group Term Life (up to $ 50,000.00)
=
qCancer
qAccident
q
nEmployee Savings: Employees can save 20 - 40% of their payroll deductions. The savings are on city, state, and federal income
taxes, including Social Security
and Medicare.
nEmployer Savings: Employers save the matching Social Security (6.20%) and Medicare (1.45%) taxes, which equates to 7.65% (1.=
45%
for municipalities) of all
the dollars put through the plan, a substantial savings.
n
n
Employer Eligibility
nOwners in
S-Corporations, Sole Proprietors and Partnerships with over =
2%
ownership, Including LLC, & LLP are not eligible for =
participation
in Section 125 Cafeteria Plan benefits, although employees
may participate.
<=
span
style=3D'visibility:hidden'>n
Flexible Spending Account
nWhat
is it?
qA Flexible Spending Account allows a participant to
use pre-tax dollars to pay for certain un-reimbursed medical and
dependent care expenses.
qThe
amount that you want to set aside for a FSA account must be made prio=
r to
the beginning of a plan year.
Flexible Spending Account - Funding<=
/div>
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nEmployee
Paid
q via Payro=
ll
deductions
nEmployer
may contribute
Transportation Benefit Accounts
n
n“Avoid taxes on transportation and
parking.”
n
nParking/Mass Transit Conversion Accounts:
qAllows you to pay for your employer provided parki=
ng and
mass transit benefits directly from
your paycheck. There are no =
claim
forms for you to fill out.
§
nParking Reimbursement Account:
qAllow you to pay for your daily or monthly parking
expenses incurred for your parking at or near your work. You can elect to have up to $19=
5.00
deducted from your monthly paycheck
TAX-FREE.
n
nMass Transit Reimbursement Account: =
qAllow you to pay for your mass transit expenses re=
lated
to your commute to work. Up to $100.00
per month can be deducted from your pay TAX-FREE for qualified mass transit expenses.
n
nYou can re=
duce
your taxable income and avoid pay=
ing
Social Security and Medica=
re Tax
(7.65%) and Federal Income Tax (15% to 40%) by enrolling in =
your company sponsored Section 132 Benefits Plan <=
/span>
HSA – Health Savings Account
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Cafeteria Plan Advisors, Inc.
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Cafeteria Plan Advisors, Inc.
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Cafeteria Plan Advisors, Inc.
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Cafeteria Plan Advisors, Inc.
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Cafeteria Plan Advisors, Inc.
![](3D"slide0039_image007.gif")
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Cafeteria Plan Advisors, Inc.
![](3D"slide0041_image008.gif")
nNew Plans, still evolving
nIndividual must be covered under High Deductible <=
/span>=
health plan
qFor 2004 plan annual deductible:
nIndividual - $1000
nFamily - $2000
nHSA custodian
nFunding by employer/employee
nDistributions from HSA excludable from gross =
income if used for “qualified medical
expense”
nNot subject to “use it or loose it” ru=
les
like FSA’s
n
HRA
–Health Reimbursement Arrangement
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nWorks=
with
Group Insurance Plan
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nReduc=
es Ins
premiums
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nPaid =
for
solely by Employer
<=
span
class=3DBB style=3D'position:absolute;left:-3.8%;top:.49em'>nReimbu=
rses
employee for medical expenses
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nPacka=
ged with
High Deductible Plans
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nFunds=
Unused
can carry to next year
Setting Up The Plan
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nCoord=
inate
Enrollments
<=
span
class=3DBB style=3D'position:absolute;left:-4.29%;top:.49em'>nActs =
as
Liaison with Payroll department
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nProvi=
des
Adjustments to Payroll
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nAdmin=
isters
All Plan Operations
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nPrepa=
res IRS
filings (5500)
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nProvi=
des Plan
Documents
Administering The Plan
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nNew
Payroll Reviewed by employer=
nFunds
Remitted to CPA, Inc for administration
=
nEmplo=
yees
Submit Claim Vouchers for Reimbursement to CPA, Inc
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nCPA I=
nc
Disburses Funds
<=
span
class=3DBB style=3D'position:absolute;left:-4.43%;top:.49em'>nCPA I=
nc
Provides Reports
Employer Benefits
&=
#13;
nEmployee Deductions
Shifted to Pre-Tax Income
nEmployer lower Gross Payroll
nReduces Employer
matching for FICA and or Medicare taxes
nThe Section 125 pro=
gram
is a tremendous opportunity for you to enhance benefits <=
span
style=3D'position:absolute;top:77.25%;left:9.73%;width:84.45%;height:6.5%'=
>package
<=
span
style=3D'mso-special-format:lastCR;display:none'>
<=
b>Premium
Only Plan (POP)
7,458.75
ESTIMATED EMPLOYER SAVINGS:
7.65%
Matching Medicare & FICA rate:
97,500.00
Total employee dollars put through plan:
90,000.00
10
=
9,000.00
750.00
75.00%
1000
Family
=
;
7,500.00
10
=
;
750.00
62.50
25.00%
250
Individual
Pretax total
# Participants
Costs Annual
Costs Monthly
%
Cost
Premiums
Employee
Employee
Employee
Monthly
Medical
<=
b>Flexible
Spending Account - Medical
=
;
918.00
ESTIMATED EMPLOYER SAVINGS:
7.65%
Matching Medicare & FICA rate:
12,000.00
Total employee dollars put through plan: