In addition to our retirement plans, Century Benefits Consulting offers one of the most comprehensive and flexible Cafereria Plans available. A Cafeteria Plan (also called a Flexible Benefit Plan or a Section 125 Plan) is an employee benefit plan that allows employees to pay their portion of insurance premiums, pay for dependent care or pay for unreimbursed medical expenses on a pre-tax basis. These plans work with your existing health coverage. Century Benefits Consulting offers both Premium Only and Medical and Dependent Care Reimbursement Plans.
Comprehensive and flexible
Our Cafeteria Plan allows you to design your own plan so you can optimize the benefits for both you and your employees. You may include health insurance premiums - including dental, vision care, accidental death and dismemberment policies, disability insurance, a medical reimbursement account, a dependent care reimbursement account, and group term life insurance.
A Cafeteria Plan can benefit you and your employees, even if your business is relatively small:
- You realize a tax savings that will offset implementation costs
- You increase employee satisfaction with the your benefit plan
- You can attract and retain more qualified employees
- Your employees save on FICA, federal and state income tax
Businesses that can benefit from a Cafeteria Plan
Regular corporations, partnerships, S corporations, limited liability companies (LLCs), sole proprietorships, professional corporations and not-for-profits can all benefit by saving on payroll taxes and providing employees a means to increase take-home pay and reduce taxes. Employee shareholders in a regular corporation can participate. Regulations prevent participation by sole proprietors, partners, individuals owning 2% or more of an S corporation and, in most cases, members of an LLC. Calculate your savings here.
Easy set up
Century Benefits Consulting helps you create your own customized Cafeteria Plan document by selecting from the variety of choices provided by us.
Once your plan document is created, your eligible employees are asked to attend an enrollment meeting that covers the provisions of the plan and explains the available choices.
After enrolling in the plan, an employee's deferral election must be entered into your payroll system. When you run your next payroll, each employee's elected deferral is withheld from pay, and is held in your general assets.
If you've chosen a premium-only plan, the employees have no further interaction. If your plan allows for reimbursement of expenses, employees are provided with statements each quarter that allows them to view their available balances, and track claims.
Quarterly Reporting
Century Benefits Consulting provides both the Employer and Employee reports on a quarterly basis. These reports show which employees are eligible to participate, deferrals by employee, as well as quarter-to-date and year-to-date status of claims.
In addition, Century Benefits Consulting prepares all required nondiscrimination testing, and the annual IRS Form 5500 filing if required.
It is really very easy. Review a list of Employer Savings using our Calculator.
You elect to sponsor a Cafeteria Plan and your payroll system deducts your employees' contributions to their Cafeteria Plan accounts on a pre-tax basis.
Employee Savings
The portion of pay that an employee directs into the medical Reimbursement/Dependent Care Assistance plan is not federally taxed. Most states also exempt Cafeteria plan contributions. In addition, contributions are exempt from FICA taxation, saving 7.65% on wages below the taxable wage base.
NOTE: Because Social Security tax will not be deducted from the amount used to pay for qualifying expenses, an employee's Social Security benefits may be slightly reduced.
Take a look at the following example.
An employee earns $30,000 annually and currently contributes $200/month ($2,400/yr) from his or her paycheck to pay the premiums for their dependents under the company's group insurance plan.
Without a Cafeteria Plan
• Gross (taxable) Pay $30,000
• Taxes @ 25% ($7,500)
• Insurance Deduction ($2,400)
• Out-of-Pocket Medical/Dental Expense (2,000)
• Net Take Home Pay $18,100
With a Cafeteria Plan
• Gross (taxable) Pay $30,000
• Pre-Tax Insurance Deduction ($2,400)
• Pre-Tax Cafeteria Plan Deduction for Out-of-Pocket Medical/Dental Expenses ($2,000)
• Taxable Pay $25,600
• Taxes @ 25% ($6,400)
• Net Take Home Pay $20,700
Your employee's take-home pay is increased by $2,600 per year ($216.67 per month) by participating in your Cafeteria Plan.
Starting a new Cafeteria plan with Century Benefits Consulting, or converting an existing plan is easy. Contact us to find out how truly affordable it can be.