figuring out what benefits to offer a company using strategies such as
what has been a big part of the shift in ee benefit plan emphasis?
favorable tax treatment used o be a strong driving force in plan design, but now the emphasis is ee needs
examples of these new benefits based on ee needs include:
flexible work arrangements
life cycle benefits
specific insurance products or benefits
tied to different stages in your life cycle
any benefit offered through an er on a group basis and ee pays the full cost
AD&D and LTD are examples of ____________ benefits
Section 125 plan
A plan where ees have a choice between benefits normally considered taxable and benefits normally considered non taxable
Examples of taxable benefits include:
GTLI with FA>50,000
examples of non taxable benefits include:
health insurance or medical care
gTLI with FA<50,000
Group STD or Group LTD
allows choice between types and levels of benefits
it is not a section 125 plan unless
there is a choice between taxable and non taxable benefits
What is a tea account
Is an fsa part of section 125
yes, unless it is used in conjunction with a cdhp
flexible spending account
ee takes pre-tax salary reduction to fund accounts
used to reimburse ee's for eligible expenses defined by the irc
what are the two types of FSA's?
dependent care and medical care fsa's
dependent care fsas cover
child care expenses or elder care expenses
medical care fsas cover
any medical expense which a health plan does not fully cover or does not cover at all.
use it or lose it rule
any unused funds remaining at the end of the plan year are forfeited by ees
ers have the the option to allow ees to submit claims for expenses incurred up to 2 1/2 months beyond the end of the year.
IRS also allows 500 to be rolled over (if you forfeit the 2 1/2 month extension)
uniform coverage rule
the thing drennan talked about where all 1200 was available immediately in the medical care fsa, but the dependent care fsa only had funds available that were put into the fsa
Who is at risk under the uniform coverage rule?
The er if the ee quits or dies, etc.
what is a way ers limit their risk from the uniform coverage rule?
they establish a maximum contribution amount per year in the fsas
maximum contributions in the medical fsa?dependent care fsa?
dependent care 5000
Irs viewpoint of fsas
You voluntarily reduced your salary by 1200 in exchange for a tiny health insurance plan
why is an fsa an example of a section 125 plan?
because you are electing the pre-tax deduction. you could have just had the money in alary (which is taxed) therefore the choice between a taxed benefit and a non taxed benefit makes it a section 125 plan)
premium only plan
medical plan offered on a contributory basis
pre salary reduction vs salary deduction
reduction is taxed after the money is taken out. deduction is taken out after the money is taxed.