Have you unraveled the mystery of section 125 benefits?
Section 125 benefits, also called “cafeteria plans” and “flexible spending accounts,” offer unique benefits workers can’t get anywhere else. Figure them out to stand out among employers in your industry. The following are just a few of the reasons these curious plans improve the caliber of candidates companies attract:
Dependent Care
The typical family can save upward of $2000 in taxes each year by maxing out their dependent care flexible spending plan. Money is drawn out regularly with each of your checks and deposited into your section 125 account. Couples are limited to pretax investments of $5000, while singles and married workers who file taxes separately from their spouses have a limit of $2500. Dependent care funds can be used to pay for daycare or nanny service, or for certain summer camps, before or afterschool programs or babysitting needed while you work.
Adoption Assistance
Combining section 125 benefits and tax credits allotted for adoption, couples can reduce their expenses by nearly 70 percent. This brings the process well within an affordable range for most families. For those willing to adopt a child with special needs, these programs can reduce their costs even more. Programs like section 125 plans make it possible for people who otherwise couldn’t afford to become parents to fulfill this lifelong dream. It’s a powerful incentive for perspective employees and a benefit that creates strong bonds between existing employees and your company.
Medical Coverage
Flexible spending accounts used for medical expenses aren’t just for copays. While they can easily be used to cover your deductibles every year, it’s possible to use them for covering a wide variety of costs. Non-traditional medical treatments that aren’t covered by your health insurance may be covered by a FSA. Medical supplies can also be covered, making it easy and affordable to take full advantage of your plan each year.
Personal Long-Term Care Expenses
One of the unique aspects of section 125 benefits is their ability to be enjoyed by employees or former employees, and their spouses and dependents. This can give you a serious advantage when it comes to attracting higher quality workers with a great deal of experience. These older, experienced workers are looking for ways to reduce their post-retirement expenses, and a cafeteria plan provides the opportunity to pay for personal long-term care through a health savings account. When you consider the tax bracket that many retirees fall in, the savings can be significant.
Accident, Disability, Medical and Group-Life Coverage
A cafeteria plan can also provide a wealth of affordable insurance benefits to your employees, including coverage for accidents and death. However, these plans exclude certain types of coverage, like Archer accounts. You can get access to the highest quality policies using the buying power of a PEO like Einstein HR.
These benefits and more can be provided affordably to your employees through the right programs. Creating happier workers and attracting higher quality candidates to your company both have the potential to improve your products. It’s worth checking out.
Call 770-962-1700 to learn more about section 125 benefits and how they reduce your tax obligations.