Cafeteria Benefit Plans

You can reduce your company's and employees' taxes by providing certain pre-tax benefits. Common benefits include tax sheltered employee portion of health insurance premiums and flexible spending accounts for dependent care and medical expenses. If you are currently requiring employees to cover a portion of their health premium, you should do so under a cafeteria plan. Also, employees can fund spending accounts for dependent care and out of pocket medical expenses, which is a benefit to them at no cost to the company (actually it saves the company payroll taxes). The employee agrees to reduce their taxable pay by the amount of the benefit, which the company pays on behalf of the employee to the provider (insurance company, dependent care provider, etc.). This reduces the employee's taxable income and the company's payroll taxes. These cafeteria plans must be formally established and administered and owners cannot participate. Contact us if you would like more information.