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A cafeteria plan or cafeteria system is a type of employee benefit plan offered in the United States pursuant to Section 125 of the Internal Revenue Code. [1] Its name comes from the earliest versions of such plans, which allowed employees to choose between different types of benefits, similar to the ability of a customer to choose among available items in a cafeteria.
A cafeteria plan - also known as a Section 125 plan, after the portion of the IRS code that regulates the plans - lets employees redirect part of their salaries and wages to pay for certain benefits.
The study found that: 1) From 2007 to 2009, the total number of medical bankruptcies (defined as due to unpaid medical bills or to loss of income due to illness, with no distinction between those causes) in Massachusetts increased by more than one third, from 7,504 to 10,093; and 2) Illness and medical costs contributed to 59.3% of bankruptcies ...
Flexible Spending Accounts (FSAs), commonly referred to as “Section 125” plans or “Cafeteria” plans, were developed as part of Internal Revenue Code Section 125 to provide employees with tax relief for their un-reimbursed medical and dependent day-care costs.
The "plan year" is commonly defined as the calendar year, but could also include the grace period of Jan 1 – March 15 of the following year. For example, the "plan year" (or "benefit year") of 2016 would run from Jan 1, 2016, until March 15, 2017, if the employer offered the grace period.
The health care can be run through the business and save the family, on average, $3,000 each year. As small businesses look to reduce costs, especially medical, the HRA can be a great tool that has been used by all too few since the 1954 tax law. HRAs are treated as group health plans and subject to the Medicare secondary payment (MSP).
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The split between group and individual plans was 11 million as opposed to 2.5 million, and the gender distribution of health savings accounts between male and female enrollees was an even 50%. Among individual plan holders, 51% were under age 40, and 49% were age 40 or over.