free whitepaper: cafeteria plan (flexible spending/fsa, dependent care/dca, commuter & Premium only plan/pop) basics and details
In 1978 the federal government added to the IRS Code (Section 125) one of the most impactful benefits in increasing American’s take home pay, the Cafeteria plan. This employer option to allow employees to elect a specific amount of their paycheck to be set aside on a pre-tax basis, takes shape through a number of component plans that can be customized to fit the needs of all involved through a written plan document and summary. The most common of those component
• Premium Only Plan (POP), eligible items include group healthcare
• Flexible Spending Account (FSA), eligible items are those related to medical, dental and/or vision expenses that are used treat, maintain or cure specific conditions.
• Dependent Care Account (DCA), most commonly used for daycare expenses for kids less than 13 years old.
• Commuter/Transit plans (TRN), reimbursable expenses are those paid by an employee to commute or park related to going to a workplace.
Want to know what to do with FSA forfeitures? Click Here
Can dollars be set aside out of an employee’s monthly paycheck pre-taxed to be used to pay their individually owned insurance plans? Download the answer
To have a FSA, the employer must have a group plan "available" for the employees to enroll in as well.