Section 125 Plans (cafeteria Plans)
Definition of "Section 125 plans (cafeteria plans)"
Additions made by Congress in 1978 to the Internal Revenue Code that provide an employee benefit plan under which the employee makes an irrevocable decision to forego a portion of future income in exchange for receiving future benefits not subject to income tax at reception date. The employer deducts the cost of the employee's future benefits from present income as a business expense. These plans usually provide three options:
- Premium Conversion Employee contributes a proportionate share of the family health care costs with pre-tax dollars.
- Medical Reimbursement Account Employee is able to use a SALARY REDUCTION PLAN to pay with dollars on a pre-tax basis for medical expenses not covered by insurance; a separate medical reimbursement account is established for each employee.
- Dependent Care Reimbursement Account Employee is able to use a salary reduction plan to pay with dollars on a pre-tax basis for dependent care expenses.
Popular Insurance Terms
Model state statute that governs terms for surrender of individual deferred annuities and cash value life insurance. This model, adopted by most states in the late 1970s and early 1980s, ...
Provision in a life insurance policy that protects its proceeds from the beneficiary's creditors. On payment, the beneficiary loses the protection of the spendthrift trust clause and the ...
Rule that prohibits the introduction into a court of law of any oral or written agreement that contradicts the final written agreement. For example, an insurance contract containing clauses ...
Several insurance companies under common ownership and, often, common management. ...
Risk management control device used to minimize accidents and injuries to employees resulting from an unsafe working environment. For example, potential cumulative trauma disorders losses ...
Defined contribution pension plan in which employer contributions are set under a collective bargaining agreement. It usually covers the employees of a number of firms and is administered ...
Legal right of a passenger in an automobile involved in an accident to bring a liability suit against the driver. It is deemed that a special standard of care is owed by an automobile ...
Application of conventional terms and conditions to the reinsurance of a risk. Contrast with non-traditional REINSURANCE. ...
Coverage in the event of a marine loss. Marine loss is damage or destruction of a ship's hull and the ship's cargo (freight) as the result of the occurrence of an insured peril. Perils ...
Have a question or comment?
We're here to help.