Welcome to GHBA Section 125 Services

Both employers and employees save significant amounts on taxes with a cafeteria plan. These plans also allow greater choice and flexibility in selecting employee benefits. An employer can establish a plan and allow employees to choose the benefits they need then voluntarily contribute funds into the cafeteria plan tax-free to pay for medical, dental and certain other insured benefit premiums. Cafeteria plans are also referred to as premium only plans (POPs), flexible spending arrangements (FSAs) or flexible benefit plans.

By offering a cafeteria plan, employers lower taxable payroll by the total amount of employee contributions – it’s a win-win situation for the employer and the employees. Lower taxable payroll means lower payroll taxes. Because pre-tax dollars are used to pay for benefits, employees realize an increase in take-home pay and reduce their taxable income (depending upon their particular situation). As an employer, you can offer a terrific new benefit, while still saving money. Employers can increase the employee’s share of insurance premiums without negatively affecting their take-home pay.

Further, depending on the benefits elected by the employer, employees may also be able to pay for non-reimbursed medical expenses and/or dependent care expenses pre-tax for expenses currently paid for with after-tax dollars. If an employer currently doesn’t require employees to contribute to the cost of their insurance, a cafeteria plan allows the employer a way to do so with the least impact on employee take home pay.

News Update:
Changes to FSA:

Effective January 1, 2011, as part of the Affordable Care Act passed in 2010, certain over-the-counter (OTC) items purchased will require a prescription written by a doctor to be reimbursed via the Flexible Spending Account. Insulin, prescription medicines and some OTC supplies, crutches, blood sugar kits and contact solution, will continue to be eligible if your health care FSA plan allows. For more details click here

GHBA, Inc.
546 Main Street, Suite 101
Worcester, MA 01608-2075
Phone: 800-548-6277

Fax: 508-770-0385

E-mail: qualifiedplans@ghba.com