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
Same as term Cancel: termination of a policy. Contract may be terminated by an insured or insurer as stated in the policy. If the insurance company cancels a policy, any unearned premiums ...
Named peril policy is how it’s called in the Real Estate Industry the insurance policies that specify the perils it covers. Under a named peril policy, if anything that isn’t ...
Requirement that the insured must have stayed in a hospital or other health care facility for at least a specified period of time before being entitled to receive insurance benefits. This ...
Coverage against foreign country expropriation underwritten by the overseas private investment corporation (OPIC) for U.S.-owned companies investing in given developing countries. ...
Same as term Contribution: principle of equity in property, casualty, and health insurance. When two or more policies apply to the loss, each policy pays its part of the loss, unless its ...
Investment risk associated with the psychology of the market in that emotions affect the price of a company's stock that, in most instances, has nothing to do with the current or potential ...
Endorsement to an automobile policy that pays specified amount for towing and related labor costs. ...
Right of a beneficiary of a life insurance policy to exchange the future installments due that beneficiary for a lump sum distribution. ...
Agreement among insurance companies through which a multinational employer is permitted to purchase employee benefits coverage's for two or more of its overseas subsidiaries under a single ...
Have a question or comment?
We're here to help.