What is a Flex, FSA or Cafeteria Plan?
A Cafeteria Plan (authorized under IRS Code-125) is a written benefit plan maintained by a company for the benefit of its employees. These plans are often referred to as Flex Plans, FSA Plans or Flexible Spending Accounts.
As a participant, you can pay your portion of certain nontaxable benefits (i.e. health and/or dental insurance premiums) with before-tax dollars by salary reduction rather than with after-tax dollars through payroll deduction. In other words, you can have your payment for qualified benefits deducted from your paycheck before your employer calculates your payroll taxes.
You can also pay for certain medical and dependent care expenses with pre-tax dollars by setting aside additional funds through salary reduction thereby further reducing your taxable income and the total amount of taxes you pay.
A Flex Plan can offer the following types of benefits:
- Pre-Tax Premium Contributions for Health and/or Dental Plans offered through your Company
- Medical Expense Reimbursement Account (Health FSA)
- Dependent Care Assistance Plan (DCAP)
Last update on May, 16 2013 by Administrator.