Get FlexBank Section 125 Premium Only Plan Document Application 2021-2024

Code Section 125 allows employers to establish a type of tax savings arrangement, called a Section 125 plan or cafeteria plan, for their employees. A Section 125 plan provides employees with an opportunity to pay for certain benefits on a pre-tax basis, allowing them to increase their take-home pay.

A Section 125 plan typically lets employees use pretax money to pay for health insurance premiums (medical, dental, vision). Other options include retirement deposits, supplemental life or disability insurance, Health Savings Accounts, and various medical or dependent care expenses.

A Cafeteria Plan lets employees receive certain tax benefits. Specifically, employees are able to use a plan to pay for approved expenses with pre-tax dollars, thus saving them from paying taxes on the money put into their Cafeteria Plan. These plans are sometimes referred to as Section 125 Plans or Cafeteria Plans.

As part of the Commonwealth's health reform law, employers with 11 or more full- time employees in Massachusetts are now required to provide a Section 125 plan that allows employees to pay their health insurance premiums using pre-tax wages.

125 is the grand total of all your pre-tax deductions EXCEPT annuities. 2022. W-2 FAQs.