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
Company not licensed by a particular state to sell and service insurance policies within that state. ...
Exposure present only at certain times of the year. For example, resort property faces a business interruption risk only from damage that cannot be repaired in time for the resort season. ...
Coverage to indemnify an owner for whom work was done if the completed work is not free of worker's liens for labor and material. ...
Something that cannot be changed. In life insurance, a beneficiary who has been named as irrevocable cannot be changed without his or her formal (written) permission. ...
Particular type of inland marine insurance. ...
Provision for coverage for buildings and personal property within the simplified commercial lines portfolio policy (sclp). The buildings and personal property coverage may be classified in ...
Clearinghouse and forum of information concerning the environment used by local governments. Included in the information are topics on drinking water systems, pesticide management, public ...
Largest property and casualty insurance company trade association in the world (international membership)whose objectives include the service of its membership through positive legislation ...
Income averaged over a specified period of years. For example, to calculate benefits in a pension plan, it is common to average the highest three years or five years of earnings. ...
Have a question or comment?
We're here to help.