Benefit Partners Insurance Group & Enrollment Services
Group Health Plans | Mississippi

A Section § 125 cafeteria plan is an employer-sponsored benefits program authorized by the IRS. It allows employees to choose between receiving taxable cash compensation or selecting from a menu of qualified, pre-tax benefits (like Health Insurance premiums, FSAs, and HSAs). This arrangement lowers taxable income for employees and reduces payroll taxes for employers. The types of cafeteria plans employers can establish include:

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• Full-flex plans in which the employer provides a fixed-dollar amount to each eligible employee and the employee chooses from a menu of benefit options. If an employee elects more benefits than the employer contribution covers, the employee is able to use pretax salary deductions to cover the difference.

• Premium-only plans (POPs) in which an employee can elect to receive their full salary in cash or have pretax deductions taken from their salary to cover employer-sponsored insurance plans.

• Simple cafeteria plans are an option for employers with 100 employees or fewer. A simple cafeteria plan requires an employer to contribute to each employee's benefits in exchange for a safe harbor from nondiscrimination requirements.

• Flexible spending accounts (FSAs) allow employees to set aside money through pretax payroll deductions for qualified health care and dependent care expenses.