No or Low-Cost Benefit 

Benefit: Provides employees a TAX discount on insurance plans they purchase through payroll deduction and reduces company FICA liability.

Rates are determined by: Number of participants. Third-party Administrator, Type of Plan (flex or pop)

Cost per person: determined by amount of premium paid by employer for employee. (Can actually save employer dollars due to FICA savings.)

Customary Plan: PPO - Allows all insurance premiums paid by employee to be pre-taxed. This saves the employee and employer 7.65% plus saves the employee any percent of federal income tax that is being withheld. The employee actually receives a discount equal to the taxes.

Who Pays: Employer pays a third party to administrate the cafeteria plan and file a required 5500 form to the IRS. The employee authorizes the employer to withhold premium from their Check and purchase insurance benefits for them.

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