Section 125 Cafeteria Plan

Facts and Features

What is a Section 125 Cafeteria Plan?

It is a plan approved by the IRS through which you may voluntarily pay certain medical, dental, child and dependent care expenses with pre-tax dollars.

How does the plan work?

Before the beginning of each Plan year, you estimate your out-of-pocket health and child/dependent care expenses. You decide how much you wish to reduce your annual pay based on the estimates. This amount is then calculated to determine the amount to be deducted per pay period using pre-tax dollars.

What are the plan limits?

The annual limit on health care reimbursements is $3,000 and $5,000 ($2500 if married, filing separately) for child and/or dependent care expenses.

When can I sign up for the plan?

The cafeteria plan is only available during open enrollment. As an employee, you will be notified of the open enrollment period.

Can participation be stopped during the plan year?

If there are major changes in your personal status, such as marriage, divorce, death or addition of a dependent, birth, adoption, termination of your or your spouse’s employment, reduction of salary or work status, you may change the election.

What are the disadvantages?

Unused funds are forfeited.
Can't drop insurance coverage unless major change qualifing event occurs.

What are some examples of eligible expenses?

Acupuncture

Ambulance

Prescriptions

Over the counter medications

Child care expenses

Contact lenses

Crutches

Day care expenses

Dental fees

Diagnostic Fees

Eyeglasses

Hearing devices

Hospital bills

Insulin

Laboratory fees

Orthopaedic shoes

Therapy treatments

X-rays

Download Cafeteria Plan Claim Form (requires Adobe Acrobat)