Cafeteria Plan Direct

03/30/2023

HIRING NEW EMPLOYEES AND EMPLOYEE BENEFITS

Employee benefits are a crucial factor in attracting and retaining top talent in any organization. Benefits can range from traditional offerings such as health insurance, retirement plans, and paid time off, to more innovative benefits such as flexible work arrangements, wellness programs, and professional development opportunities. In this article, we will explore the importance of employee benefits in hiring new employees.

Attracting Top Talent

In today's competitive job market, employees have a wide range of job opportunities available to them. As a result, it's essential for organizations to offer a comprehensive benefits package that can attract top talent. Employees are looking for benefits that can provide financial security, work-life balance, and opportunities for personal and professional growth.

A strong benefits package can also differentiate an organization from its competitors. Organizations that offer innovative and comprehensive benefits packages can stand out from others and be more appealing to job seekers. This can be particularly important in industries with high demand for skilled workers, where organizations must compete for top talent.

Retaining Employees

Employee benefits are also essential for retaining employees. When employees feel valued and supported by their organization, they are more likely to remain with the organization for the long term. Benefits such as retirement plans and professional development opportunities can demonstrate an organization's commitment to investing in its employees' future.

In addition, benefits can help improve employee morale and job satisfaction. Benefits such as flexible work arrangements or wellness programs can help employees maintain a healthy work-life balance and improve their overall well-being. When employees feel supported and engaged, they are more likely to be productive and motivated in their work.

Cost Savings

While offering employee benefits may seem costly, it can actually lead to cost savings for organizations in the long run. When organizations offer benefits that promote health and wellness, such as wellness programs and health insurance, employees are less likely to get sick or require time off work. This can lead to increased productivity and lower healthcare costs for the organization.
In addition, offering a comprehensive benefits package can help reduce turnover costs. When employees are satisfied with their benefits and overall compensation package, they are less likely to leave the organization. This can save organizations money on recruitment and training costs for new employees.

In conclusion, employee benefits are essential for attracting and retaining top talent, improving employee morale and job satisfaction, and reducing turnover and healthcare costs. Organizations that offer innovative and comprehensive benefits packages can differentiate themselves from competitors and attract and retain the best employees. By investing in employee benefits, organizations can create a positive work environment that promotes employee well-being and supports long-term success.

Cafeteria Plan Direct

03/30/2023

PRE-TAX BENEFITS OF CAFETERIA PLANS

Cafeteria plans, also known as Section 125 plans, allow employees to choose between cash and a range of benefits, such as health insurance, dental coverage, vision insurance, and retirement plans. One of the key advantages of cafeteria plans is that they offer pre-tax benefits, which can provide significant tax savings for both employees and employers. In this article, we will explore why cafeteria plans offer pre-tax benefits.

What are Pre-Tax Benefits?

Pre-tax benefits are a form of tax-efficient compensation that allows employees to pay for certain expenses, such as health insurance premiums, with pre-tax dollars. By paying for these expenses with pre-tax dollars, employees can reduce their taxable income, which can lead to significant tax savings. Pre-tax benefits are also advantageous for employers, as they can reduce their payroll taxes by offering these benefits.

How do Cafeteria Plans Offer Pre-Tax Benefits?

Cafeteria plans offer pre-tax benefits through a process called salary reduction. Under a cafeteria plan, employees can choose to have a portion of their salary redirected to pay for certain benefits, such as health insurance or a flexible spending account. Since these contributions are made before taxes are calculated, they are considered pre-tax dollars. As a result, employees can reduce their taxable income, which can lead to lower taxes and more take-home pay.

Why Do Cafeteria Plans Offer Pre-Tax Benefits?

Cafeteria plans offer pre-tax benefits for several reasons. First, pre-tax benefits can provide significant tax savings for both employees and employers. By reducing taxable income, employees can lower their income tax liability, while employers can reduce their payroll taxes. This can help make benefits more affordable for employees while also reducing costs for employers.

Second, offering pre-tax benefits can help employers attract and retain top talent. By offering a comprehensive benefits package that includes pre-tax benefits, employers can demonstrate their commitment to providing a competitive compensation package. This can be particularly important in a competitive job market where employees are looking for comprehensive benefits packages that provide tax savings.

Finally, cafeteria plans are regulated by the Internal Revenue Service (IRS) and must comply with specific federal regulations. By offering pre-tax benefits through a cafeteria plan, employers can ensure that their benefits package is compliant with these regulations and take advantage of tax benefits while avoiding costly penalties.

In conclusion, cafeteria plans offer pre-tax benefits to provide tax savings for employees and employers, attract and retain top talent, and comply with federal regulations. By offering a comprehensive benefits package that includes pre-tax benefits, employers can create a more competitive compensation package and demonstrate their commitment to supporting their employees' financial well-being.

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03/30/2023

CAFETERIA PLAN ADVANTAGES

A cafeteria plan, also known as a Section 125 plan, is a type of employee benefit plan that allows employees to choose between receiving cash or selecting from a variety of benefits, such as health insurance, dental coverage, vision insurance, and retirement plans. Cafeteria plans are a popular employee benefit option for many reasons, including their advantages for employers. Here are some of the key benefits that employers can enjoy by implementing a cafeteria plan.

Increased Employee Satisfaction

One of the biggest advantages of a cafeteria plan is that it can increase employee satisfaction. By offering a wide range of benefit options, employers can create a more personalized benefits package that meets the unique needs and preferences of each employee. This can lead to greater job satisfaction and a more engaged workforce.
Cost Savings
Employers can also save money by offering a cafeteria plan. Since employees can choose from a range of benefits, employers can offer a lower-cost benefits package and still meet the diverse needs of their workforce. Additionally, offering a cafeteria plan can help employers reduce their payroll taxes, since employees who participate in the plan can reduce their taxable income.

Attracting and Retaining Talent

A well-designed cafeteria plan can also help employers attract and retain top talent. In today's competitive job market, a comprehensive benefits package can be a key factor in an employee's decision to join or stay with a company. By offering a cafeteria plan, employers can differentiate themselves from other employers and demonstrate their commitment to providing a flexible and personalized benefits package.

Compliance with Federal Regulations

Cafeteria plans are regulated by the Internal Revenue Service (IRS) and must comply with specific federal regulations. However, by following these regulations, employers can take advantage of tax benefits and avoid costly penalties. Working with a qualified benefits consultant can help employers ensure that their cafeteria plan is compliant with federal regulations.

Flexibility

Finally, cafeteria plans offer employers flexibility in designing their benefits package. Employers can choose which benefits to offer, how much to contribute to each benefit, and what percentage of employee contributions to match. This flexibility allows employers to create a benefits package that is tailored to their specific needs and budget.

In conclusion, cafeteria plans offer a range of advantages for employers, including increased employee satisfaction, cost savings, attracting and retaining top talent, compliance with federal regulations, and flexibility. By implementing a cafeteria plan, employers can create a more personalized benefits package that meets the needs of their employees while also achieving their business goals.

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07/03/2020

HSA Limits Increase for 2021

The IRS recently released Revenue Procedure 2020-32 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2021. The IRS is required to publish these limits by June 1 of each year.

These limits include:

The maximum HSA contribution limit;
The minimum deductible amount for HDHPs; and
The maximum out-of-pocket expense limit for HDHPs.
These limits vary based on whether an individual has self-only or family coverage under an HDHP.

Eligible individuals with self-only HDHP coverage will be able to contribute $3,600 to their HSAs for 2021, up from $3,550 for 2020. Eligible individuals with family HDHP coverage will be able to contribute $7,200 to their HSAs for 2021, up from $7,100 for 2020. Individuals who are age 55 or older are permitted to make an additional $1,000 “catch-up” contribution to their HSAs.

The minimum deductible amount for HDHPs remains the same for 2021 plan years ($1,400 for self-only coverage and $2,800 for family coverage). However, the HDHP maximum out-of-pocket expense limit increases to $7,000 for self-only coverage and $14,000 for family coverage.

Employers that sponsor HDHPs should review their plan’s cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) when preparing for the plan year beginning in 2021. Also, employers that allow employees to make pre-tax HSA contributions should update their plan communications for the increased contribution limits.

06/20/2020

06/19/2020

DOL NOW FULLY ENFORCING FFCRA PAID LEAVE RULES FOR CORONAVIRUS

After observing a 30-day non-enforcement period to help employers come into compliance with new paid leave rules, the U.S. Department of Labor (DOL) has announced that it is fully enforcing all provisions of the Families First Coronavirus Response Act (FFCRA).

The FFCRA requires private employers with fewer than 500 employees and certain government employers to provide paid leave for their employees, either for the employees’ own health needs or to care for others, for reasons related to the coronavirus (COVID-19) pandemic. These requirements apply for employee leave taken between April 1 and Dec. 31, 2020.

Now that the temporary policy has expired, the DOL is fully enforcing the FFCRA. Employers may still face retroactive penalties for violations committed during the non-enforcement period under certain circumstances. According to the DOL’s frequently asked questions (FAQs) about the FFCRA, the agency will retroactively enforce violations back to the effective date of April 1, 2020, if employers have not remedied the violations. Penalties for FFCRA violations include civil lawsuits and criminal charges punishable by imprisonment and fines of up to $10,000.

The laws take effect within 15 days of passage; the leave benefits will expire on Dec. 31, 2020.

01/08/2019

EMPLOYERS: UPDATE YOUR SECTION 125 PREMIUM ONLY PLAN BY JANUARY 1, 2019

Section 125 Premium Only Plans allow employees to pretax or avoid paying income taxes on their portion of employer sponsored health insurance plans and some forms of non-employer-sponsored health insurance premium. January marks the beginning of a new Section 125 plan year for most employers.
If your company takes advantage of Section 125 pretax deductions you might want to verify that you actually do have a current Section 125 Plan Document. It’s not unusual for employers to take Section 125 insurance pretax deductions for years without knowing that a formal plan document and summary plan description are required by the IRS and Department of Labor.

For the unfortunate employer who goes into a IRS audit without a current Section 125 plan documents the result could be reclassification of all pretax insurance deductions back to taxable income. The IRS then could assess and add interest and penalties on the unpaid taxes.

Many more employers have Section 125 Plan Documents that have never been updated. These employers are making administrative decisions based on outdated tax law and could be allowing events that would disallow their plan. If your Section 125 Plan Document hasn’t been updated since 2010 you should seriously consider updating it this January. Also, the Department of Labor requires employers to distribute new summary plan descriptions to employees once every five years.

If your Section 125 Plan Document is old, outdated or missing, the New Year would be a good time to update it. How much does it cost to update or replace an old Section 125 plan? Cafeteria Plan Direct has been helping employers amend or replace their Section 125 plan document for just $79 (Basic PDF). www.cafeteriaplandirect.com

07/18/2018

A handful of the world’s biggest drugmakers are canceling or reducing planned price increases in the U.S., following a new California drug pricing transparency law and continued political pressure over pharmaceutical costs.

06/27/2018

Federal officials say loosening the regulation of these plans will offer small businesses a more affordable health insurance option, but critics are wary.

06/20/2018

The Trump administration issued a final rule making it easier for small businesses to band together and offer insurance that is exempt from many requirements of the 2010 health law.

06/04/2018

2019 HSA and HDHP Limits Released

The Internal Revenue Service (IRS) has announced the 2019 inflation-adjusted amounts for Health Savings Accounts (HSAs) and high deductible health plans (HDHPs).

2019 HSA Contribution Limits
For calendar year 2019, the annual limit on HSA contributions for an individual with self-only coverage under an HDHP will be $3,500, up from $3,450 for 2018. The annual limit on HSA contributions for an individual with family coverage under an HDHP will be $7,000, up from $6,900 for 2018.

2019 HDHP Amounts
For calendar year 2019, an HDHP will be defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) that do not exceed $6,750 for self-only coverage or $13,500 for family coverage.

05/30/2018

New research by AHIP indicates prescription drugs and doctor services costs make up almost half of premium spending, an amount that even surprised researchers.

05/02/2018

A lack of understanding about specific aspects of health care benefits can cause headaches for even the savviest business owner.

03/30/2018

SECTION 125 POP PLAN DOCUMENTS: THE PENALTIES FOR NON-COMPLIANCE

As many employers may be well aware by now, a Premium Only Plan (POP) Plan or Section 125 allows for employees’ health insurance premiums to be deducted with the use of pre-tax dollars, thereby resulting in substantial tax savings for both parties. A lot of small and medium-sized businesses across the country have already availed of this tax-saving measure provided for in Section 125 of the Internal Revenue Service Code.

The process of setting up and maintain a plan is very simple if you choose to seek the assistance of a professional. If you’re one of those employers who are blissfully unaware of or are intentionally choosing to ignore Section 125 POP Plan compliance requirements, beware. You may be in for some serious consequences.

Sponsoring a Section 125 Premium Only Plan does not only come with benefits but also documentation requirements. In this regard, many employers may be ill-advised by their tax professionals, don’t know where or how to start with staying in compliance, or they may have simply forgotten.

For those who fall under any of these categories, the penalties for non-compliance can be stiff, depending also on the gravity of the violation. The penalties are enumerated in the IRS Code Section 125 to include the following:
Fines of up to $5,000 or imprisonment of up to 1 year for willful violation of ERISA provisions;
Fines of up to $10,000 and/or imprisonment of up to 5 year for making any false statement or representation of fact, knowing it to be false, or for deliberate non disclosure of any fact required by ERISA;
- A penalty of $110 /day for failure to distribute a Summary of Plan Description or SPD to participants within 30 days of request;
- A Department of Labor (DOL) penalty of $100/day, up to a maximum of $1,000 if an SPD is requested and is not provided within 30 days.
- Another key consequence that could stem from non-compliance of Section 125 POP Plan requirements is that the sponsoring employer could be held liable for claims against the plan if the documents do not give participants accurate information of the plan polices.

But that’s not all. In a worst case scenario, the pre-tax deductions may be disallowed from the beginning, leading to an IRS assessment of overdue back taxes plus interest and corresponding penalties.
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As an employer you have multiple tasks to juggle. The scenario’s above can clearly be avoided through the guidance and advice of the professionals. There are web-based document creation companies like www.cafeteriaplandirect.com who can create, maintain and outline the employer responsibilities while assisting you with compliance updates for a low annual fee of $99. Make sure that your Section 125 POP Plan documents are updated and in compliance today.

03/30/2018

$79 - Premium Only Plan Document. Stay in compliance by having a Premium Only Plan document on file to allow you to deduct employee health premiums on a pre-tax basis. A simple DOL audit can expose not having this document on file and recorded. Penalties can be excessive. Get your document today and remain compliant. www.cafeteriaplandirect.com

03/14/2018

Antonio Villaraigosa thinks he has a solid weapon to hammer Lt. Gov. Gavin Newsom with as they run for governor. And he probably does. It’s Gavin Newsom’s strong support for creating a state-run, single-payer health insurance program.

02/19/2018

Since the late 2000s Great Recession, historically low increases in health-care prices have helped hold down inflation. That may be about to change.

01/17/2018

Compliance IRS Extends Deadline to Issue Health Coverage Forms to Employees3 Things You Need to Know The IRS has extended the due date for employers to provide 2017 health coverage information forms to individuals. Employers have until March 2, 2018. The extension means your employees may not receiv...