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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.
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.
Thus, one could use the entire amount on day one of the plan year, terminate employment on day two of the plan year, and contributions would have been none or negligible (e.g., perhaps 1/26 in the case of biweekly contributions). The "free" money is not taxable because the IRS views these plans as health insurance plans for tax purposes. [21]
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The surcharge is applied when an employer does not arrange for a pre-tax payroll deduction system for health insurance (a Section 125 plan, or a "cafeteria plan"), and has employees who receive care that is paid from the uncompensated care pool, renamed in October 2007 as the Health Safety Net. [30]
A Qualified Employee Discount is defined in Section 132(c) as any employee discount with respect to qualified property or services to the extent the discount does not exceed (a) the gross profit percentage of the price at which the property is being offered by the employer to customers, in the case of property, or (b) 20% of the price offered for services by the employer to customers, in the ...
Following implementation of the Affordable Care Act, HRAs must be integrated with a qualified employer-sponsored group health insurance plan to avoid excise tax penalties. [4] Using a Health Reimbursement Arrangement yields "tax advantages to offset health care costs" for both employees and employers. [1]
The Kamala Harris campaign has made one of its first concrete policy proposals this week with a tax plan. The centerpiece of the plan is a series of high-end tax increases on corporations and ...
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