The Section 125-Cafeteria Plan aims to accommodate the needs of valued employees and skilled job applicants by providing options with insurance plan benefits to cater to each individual's needs. Section 125 focuses on the increase of spendable income for each employee by deducting the cost of health plan coverage from one's pre-tax income.

NM&A's Section 125 services to this plan option include: on-site interviews with individual employees, introductory group meetings and informative literature, monthly plan processing and disbursement of funds, and specialized reports for both the employers and individual plan participants.

Advantages of a Cafeteria Plan to Employees:

• Premiums can be paid with pre-tax dollars
• Employees save tax dollars and increase their spendable income
• More benefits can be afforded
• Employees enjoy the flexibility of customizing their benefit plan

Advantages of a Cafeteria Plan to Employers:

• Thorough planning and management positively effects the bottom line
• Increased employee morale and retention rate with expanded employee benefits

The Section 125-Cafeteria Plan can take on two main forms:

Premium Only Plan (POP)	Flexible Spending Accounts (FSA)
A POP is a simple method that allows premiums for employee group plans (such as an HMO, PPO, health insurance, cancer insurance, etc.) to be paid with an employee's pre-tax dollars.	FSAs allow employees to set aside pre-tax funds from their salaries into special accounts to pay for: 1) Unreimbursed Medical Expenses 2) Child or Dependent Care Assistance.
Plan applies to the following options: Group term life Accident insurance Health/major medical Dental insurance Vision insurance Cancer Insurance Intensive Care Hospital Indemnity Critical Illness Short Term Disability/Long Term Disability	Items eligible for payment under accounts established for Unreimbursed Medical Expenses (expenses not covered by health insurance) include: deductible and co-pays prescriptions (including birth control) dental expenses/Orthodontic services Chiropractic/X-ray/Lab fees Vision (glasses and/or contacts) Hearing aids Items eligible for payment under accounts established for Child or Dependent Care Assistance: child or elder care, summer camp, etc.

Some frequently asked questions regarding the details of Section 125 Plans:

1. What are the plan maximums for the Flexible Spending Accounts?
The maximum annual election for the Dependent Care FSA is $5,000 ($2,500 for married filing separately). The employer sets the Medical FSA maximum annual election.

2. Are there any government requirements for having a Cafeteria Plan?
Yes. The plan is required to file Form 5500 with Schedule F annually. This must be done within seven months of the plan year end. Discrimination testing must be performed to ensure that the plan does not discriminate in favor of key or highly compensated employees. The plan is subject to COBRA and FMLA.

3. Must the employer offer Group Medical Insurance to carry this plan?
No. The employer controls benefits that are offered to employees. Only the benefits that are available through each individual employer are deductible by the employees. The underlying premise of the Section 125 Plan enables an individual to customize the plan benefits to the best of his/her needs. NM&A works cooperatively with self-insured companies to ensure client satisfaction with these plans.