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
Monthly income payment provided by a Disability income insurance policy to the insured wage earner when income has been interrupted or terminated because of illness, sickness, or accident. ...
Termination of coverage in insurance. ...
Increases (decreases) in capital assets (such as stocks and bonds) between the date of purchase and the date of sale. ...
Financial analysis method established by the national association of insurance commissioners (naic) to detect problems of property and casualty insurance companies and life and health ...
Incidents covered under workers compensation benefit. ...
Describing a risk whose probability of loss is less than the norm or the standard expectation of loss for that underwriting classification. ...
Insurance that covers an indirect loss stemming from a direct loss by a covered peril to income-producing property. A building destroyed by fire represents a direct loss. Lost income ...
Life insurance: Bonds most state regulations permit life insurance company investments in debentures, mortgage bonds, and blue chip corporate bonds. Stocks(a) preferred stock investment ...
Coverage under the auspices of a federal or state agency that can be either mandatory or elective. ...
Have a question or comment?
We're here to help.