Cafeteria Plan / Section 125 of the IRS Code

Cafeteria Plan
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Cafeteria Plan, the nickname for the Section 125 of the IRS Code, is a benefit provided by an employer which allows an employee to contribute a certain amount of his/her gross income to a designated account before taxes are calculated (Pre-Tax Deduction), guarantees that the take-home amount will not change.

This account can be used to reimburse the employee for certain types of insurance premiums, medical, or dependent care expenses throughout the plan year, or claim period, as the employee incurs these compliant, qualified expenses.

Guarantee employees will have no deductions in their take-home check, and the employer will have no out of pocket money, just saving that will increase the employer’s bottom line.

In January of 2014, Congress approved that non-discriminatory, compliant, wellness health care plans qualify under Section 125.

Why Install A Compliant Wellness Program?

In January of 2014, Congress approved that thru education and participation in an approved, compliant wellness healthcare program will lead to a reduction in the nation’s overall healthcare cost. 

The U.S. Center for Disease Control & Prevention states that employee behavior is the primary determinant of health, having as much effect as genetics, environment, and access to care combined. The CDC estimates that more than 75% of all U.S. health care costs are due to chronic conditions that are mostly preventable by reducing behavior-based risk factors (been healthier).

Congress and the CDC believe that behaviors can be modified, and employers can help employees by providing the appropriate tools to promote changing unhealthy behaviors and adopting new, healthier behaviors that will lower their health risks. No better proof than the Covid19 (Corona Virus). Those in better health conditions are most likely to have fewer problems in the event of getting contaminated. Proactive employers can adopt health plan designs that focus on the connection between behavior, health, and the cost of health care. This can, in turn, help employees take steps to lower health risks and fees, and aim to ultimately increase their ability to fund a secure retirement.