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
Accrediting body for the CPCU (Chartered Property and Casualty Underwriter) designation. The institute provides undergraduate and continuing education in property and casualty insurance ...
Reinsurance of & re insurer such that the re insurer protects itself from a catastrophe occurrence. Just as an insurer must decide to cede to the re insurer a portion of a risk it has ...
Right to insurable interest in property such as the right of a secured creditor in the property pledged as security. ...
Clause in a surety bond contract providing for restoration of coverage after a loss without requirement of a restoration premium. ...
Lump sum premium paid in advance instead of the frequency of premium payments stipulated in the insurance policy. This lump sum premium payment will be less than the present value of the ...
Offer and acceptance upon which an agreement is based. For a contract to be legal (and thus enforceable in a court of law), an offer must be made by one party to another party, who accepts ...
Unit of the life office management association (LOMA), which prepares and administers educational materials for the Fellow Life Management Institute (FLMI) Program. Upon successful ...
Length of time required to amortize the excess expenses of acquiring a given group of life insurance policies. In acquiring a policy, a life insurance company may incur expenses (such as ...
Personal property insurance that provides all-risks coverage for wedding presents, wherever they may be in the world, until they are permanently located. Because the new owners of wedding ...
Have a question or comment?
We're here to help.