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
Policy that combines life insurance coverage on two lives and pays policy proceeds on the second person's death with the accumulation potential of an underlying variable investment ...
Total amount of insurance on an insurer's books at a particular time. ...
Special policy blank issued by an insured for individual shipments or other purposes under an open policy. The open policy allows an insured to buy protection for all marine business for an ...
A procedure in which the employer has absolute liability for the injuries incurred by the employee and the employee does not have the right to sue the employer for those injuries suffered. ...
Coverage through an endorsement to the glass insurance policy on an all risks basis, subject to the exclusions of wear and tear, and damage caused by nuclear hazard, war, and electricity. ...
Academic publication of the American risk and insurance association in which articles deal with aspects of risk, insurance, and allied fields of study. ...
Protection under an insurance policy. In property insurance, coverage lists perils insured against, properties covered, locations covered, individuals insured, and the limits of ...
Form whose purpose it is to help the agent and the prospective policyowner judge the validity of the insurance company's policy illustrations. This questionnaire's focus is on the ...
Percentage of income required by a retiree to maintain a desired standard of living during the retirement years. ...
Have a question or comment?
We're here to help.