Why does your company need a premium only Section 125 Plan?

 The premium only section 125 Plan is a cafeteria plan which comes under the Internal Revenue Code (IRS) enables employees to take taxable benefits such as their salary and turn them into non-taxable gains. Such plans solely permit employees to keep a portion of their payrolls or wages on a pre-tax basis to meet medical costs, insurance premiums, and other expenses.

The cafeteria plan is free from federal taxes (FICA and FUTA), state income tax, social security tax, and medicare tax- meaning a decrease in the employees' total taxable salary and an increase in their net pay. Also, the reduction in the gross earnings of the employees subsequently allows the employer to enjoy certain tax benefits as well. 

Note: 

1. A plan cannot be counted as a cafeteria plan if it only provides taxable benefits to the employees.
2. Typically, a cafeteria plan has more non-taxable benefits when compared to taxable benefits (non-taxable benefits are the main selling points).

Benefits Offered By A Cafeteria Plan

Non-taxable benefits

• Health Insurance
• Vacation Days
• Dental Care
• Vision Coverage
• Life Insurance Plans
• Accidental Death and Dismemberment Plans
• Disability Insurance
• Flexible Spending Accounts (FSA)
• Dependent Care Flexible Assistance Plans
• 401(k) Retirement Plans

Taxable Benefits

• Cash
• Stocks

Note: Cafeteria Plans do not include benefits such as educational assistance and de minimis fringe.

Who can open a Section 125 plan?

All types of employers can open the premium only section 125 plan.This includes C corporations, S corporations, LLCs (Limited Liability Companies), partnerships, governmental entities, and sole proprietorships. Typically, employees who are subject to U.S. income taxes and have had spent at least 1,000 hours working for your company in the previous calendar year qualify for this plan. 

Note: Exceptions to participate in a Section 125 plan apply to those employees:

• Under 21 years of age
• Who has worked for your company for less than 365 days
• Partners in a partnership
• Members in an LLC

How to start a Section 125 plan

Setting up a Section 125 plan is pretty straightforward and requires only three simple steps:

1. The employer needs to complete the required plan with proper documentation.
2. Notify employees.
3. To meet your documentation needs, hire a third party such as a broker or a benefits attorney to administer your Section 125 plan, process employee reimbursements, and keep your company abreast of proposed regulations.

You must conduct nondiscrimination testing; once you start offering Section 125 plans to your employees. The nondiscrimination tests are designed to determine if the plan favors highly compensated or key employees of the company. Here are the three criteria that you must follow to conduct nondiscriminating testing:

• Eligibility to participate: You must revise your plan if the third party appointed by your company finds that your Section 125 plan is inclined more towards your company's highest-paid employees to participate.

• Benefits and contributions: The benefits and contributions offered by you in your Section 125 plan must equally favor all types of employees- be it the highest-paid employee or the lowest paid.

• Concentration: The value of nontaxable benefits provided to your key employees (who can be identified by your third party) must be at most 25% of the value of all employees' nontaxable benefits.

Conclusion

For many employers, the premium only section 125 plan are a great way to retain their valuable employees; while offering them multiple benefits. Sometimes, the cafeteria plans can be discriminatory. Therefore, employers need to establish simple cafeteria plans that will eliminate the nondiscrimination testing criteria. 

Ensure to consult qualified employee benefits professionals from Davidow Financial & Insurance Services, Inc., if you want to offer your business employees a beneficial section 125 cafeteria plan. Contact the experts today for detailed steps to set up and administer the Section 125 Premium Only Plan. 

Do you want to know what makes Silvia Marroquin a great employee benefits advisor? Read on!

It is becoming a struggle for many companies around the world to manage their total compensation packages on their own. This blog will help you in understanding the work culture of an employee benefits advisor. We will also outline the steps required to meet your short and long-term goals with the leading expert from Davidow Financial & Insurance Services, Inc., Silvia Marroquin, who can help you create a plan that encompasses all aspects of your business finances.

How can an Employee Benefits Advisor help your business to grow?

The recommendations made by a benefits advisor can help differentiate your business from the rest of the competition. A benefits advisor has the experience and expertise to provide services that go far beyond a benefits plan. They play an important role in counseling and educating the workforce of an organization about the business, goals, and quality benefits package available to them that meets both employee needs and employer objectives. Let’s look at some of the benefits offered by the employee benefits advisor.

Problem Solvers

The main advantage of hiring an employee benefits advisor is that they can take great care of your problem when the going gets tough. They can provide overall guidance in ensuring that the benefits plan is implemented and managed correctly on a day-to-day basis. As the demand and requirements of the employees are increasing, an advisor can help your business implement innovative programs by working in coordination with the HR department to offer an open-minded benefits plan to the employees in order to retain them. 

The main role of an advisor is to advise and suggest changes for the betterment of your company. Regardless of how complex the problem is, the experience and skill set possessed by an advisor will help you navigate several industry problems promptly. In all likelihood, they have dealt with such types of obstacles many times in their previous dealings. Since they have the expertise in providing creative solutions, they can be able to offer you a range of options that you may not have considered earlier to achieve your end goals. 

Unmatched Expertise

The employee benefits advisors are equipped with market research techniques to determine the best benefits programs for the employees. That’s what advisors are- the subject matter experts in their field. This extensive knowledge in handling difficult situations with ease helps them cut through regulator complexities and manage your benefits administration with personalized service. 

Most employers don’t have time or expertise to stay up to date with the latest developments in the business and understand the requirements of the employees in order to remain compliant and offer prompt guidance towards solving their problems. On the other hand, a well-informed advisor will provide tremendous value to your business by bringing thoughtful and innovative proposals to help business owners meet their needs.

Periodic Evaluation

The benefits management process involves strategies that need to be assessed regularly to determine whether the implemented employee benefits plan is working or not. A business can get affected due to various changing dynamics such as the economy, the regulatory environment, workforce demographics, etc. An employee benefits advisor helps an employer in developing goals and measurements in assessing the benefits programs and take necessary steps- by making proper adjustments. Analyzing the specific queries of the employees, an advisor uses external trends and benchmarking data to evaluate the effectiveness of the formulated benefits program periodically and suggest the required changes keeping their client’s budget in mind. 

Finishing Lines

Silvia Marroquin is a veteran employee benefits advisor from Davidow Financial & Insurance Services, Inc., with more than 20 years of experience. Working with such an experienced and knowledgeable benefits advisor can help businesses in implementing beneficial health packages for their employees to meet their benefits needs. So, visit Davidow Financial & Insurance Services, Inc. today to focus on running your business while Silvia Marroquin navigates the complexities.

Avail the best financial and insurance services for custom-fit employee benefit programs

Davidow Financial & Insurance Services, Inc. is one of the leading nationwide insurance agencies that offer an extensive portfolio of value-added services in the employee benefits space including ACA compliance services, 1094/1095 reporting, IRS 6055 and 6056 Reporting, ERISA wrap Documents Services, Flexible Spending Account (FSA), and Premium Only Plans (POP). 

 

Davidow Financial constantly in contact with the clients so that they can design, implement, and administer customized employee benefit programs to generate a demonstrable Return on Investment (ROI). They help the management and the employers invest tactfully in form of competitive customized benefit programs that can act to reduce disability, absenteeism, and chronic illness. 

 

Employee Benefit Plans that cover healthcare costs and on-demand concierge claims

 

Our integrated and innovative healthcare solutions create value for employers and their employees by protecting their health, creating wealth, and ensuring their interests. They deal with a range of employee benefit plans including dental, vision, medical, disability, and voluntary worksite insurance, to name a few benefits that we offer.

 

Controlling healthcare costs

 

If you are worried about the spiraling healthcare costs allotted for your employees, then Davidow Financial is one of the leading insurance agencies that design the best-suited healthcare plan, shortlist insurance carriers based on the market intelligence, and negotiate the most cost-effective yet best plans for your organization and the employees. 

 

On-Demand Concierge Claims Services

 

The nationwide  providers have profound experiences in Concierge Claim Services that provide access to financial and insurance services the employees to get in touch with the expert in-house claim staff for instant assistance with any aspect of the claim. Whether finding a new doctor, resolving a billing error, or assistance with the claim process, your employees have the chance of connecting to the most industry-savvy professionals in the industry. 

 

 

Huge Range of Voluntary Insurance

 

Voluntary benefits, known as supplementary benefits are offered by employers to fill the gap of the employee’s health, accident, and disability insurance needs. However, it is paid by the employees through payroll deductions. A wide range of voluntary insurance plans is available with DF Insurance services in form of traditional and non-traditional benefits. 

 

Traditional insurance products include vision, dental, critical illness, life insurance, cancer, and accident insurance. On the other hand, non-traditional insurance focuses on legal, financial counseling, identify theft, and student loan repayment, etc. 

Voluntary benefits plans are ideal for smaller businesses to compete and differentiate from larger enterprises. The employer offers a more robust benefits program by providing a Voluntary Benefits Program to attract and retain versed employees.

 

If you want to help your employees save more with restructuring benefit plans, you may choose the Premium Only Plan Smart solution. It can augment your employee benefits package while offering certain employee tax advantages. Instead of paying with post-tax mode, employees can pay for these welfare benefits with pre-tax premium deduction. Davidow Financial & Insurance Services boasts of sound experience in this field as they have been working closely with employers for decades to design, implement, and administer custom-fit employee benefit programs. 

Get the best southern California health agent for buying MediGap plans.

 Want a Medicare Plan? Here's what you need to know!

Medicare is issued to those that qualify (40 quarters of Full-Time work) and is available for those that are 65 years old and above. It will cover all types of procedures including hospital, doctors, x-rays, labs to name a few; and for those facing disability or End Stage Renal Disease.

As the Medicare program states that it has 4 parts, you need to choose the one that best suits your needs. You will automatically qualify for Medicare, if you are already are benefiting under Social Security or Railroad Retirement Board. The same auto enrollment is possible if you have some sort of disability, whether or not you are above 65 years of age.

Still, a normal Medicare plan may not always let you enjoy the full benefits of a health insurance plan. This is when you need a Medicare supplement insurance coverage for adding the missing items, which are not covered under a conventional plan.

This supplemental coverage for Medicare is also known as a MediGap plan, and is generally issued or bought through private health insurance companies.

For a person unfamiliar with a MediGap plan this can be a bit puzzling, as it is involving its own unique set of Plans (namely Plan A, B, C, D, F, G, K, L, M, N, which you have to choose carefully).

MediGap plan or a Medicare Supplement Insurance plans will help you get coverage for the costs, that are not included in the Part A and Part B of your Medicare Plan.

Let's learn about MediGap (Medicare Supplement) in more detail!

When and how can you buy a MediGap policy?

First of all, MediGap policy is purchased from a private health insurance company. However, such private insurance companies must be authorized by the Centers for Medicare And Medicaid Services (CMS).

Next, you must be already covered under both Medicare Part A and B; and must qualify for the criteria of being 65-year-old, or suffering from disability and/or End Stage Renal Disease.

Once you are eligible, you can go ahead and purchase a MediGap plan based on your specifications.

There is also a MediGap Open Enrollment Period that gets started the very day you turn 65, and is valid for 3 months before your birthday and 3 months after. In this time period, you will be getting the best MediGap policy rates without any pre-existing health conditions.

Thus, the key takeaway-point here is that you must be enrolled in Medicare Part A and B, to enroll for a MediGap plan; and policy shopping will be better if the MediGap open enrollment period is still active for you as there will not be any pre-existing conditions.

Is MediGap the same as Medicare Advantage Plan?

MediGap plans and a Medicare Advantage Plans (Medicare Part C) are not the same. Though they are both bought from a private insurance company, they will add significant benefits to your Medicare Plan alone.

A Medicare Advantage Plan will steer you away from your active Part A and Part B Medicare plan, and replace it with a new Part C, this plan combines Part A and B, while providing more add ons. Sometimes, Part D (prescription drug coverage) can also come under the umbrella of the Medicare Advantage plan.

On the other hand, a MediGap plan will give add coverages to your Part A and B Medicare plan more than Medicare alone.

Both the Medicare alternative plans can sound the same, but the basic difference is that with a Part C Medicare Advantage plan it becomes an HMO medical plan, you must see doctors and hospitals that are only in the HMO Network. This does not happen with a MediGap plan with a MediGap plan, you have the freedom to choose any hospital or doctor, accepting Medicare. This gives you a lot of choices, while opting for your preferred treatments.

Again, a Medicare Advantage Plan will only satisfy claims for treatments done inside the insurer's network of doctors and hospitals (HMO Network).

However, a MediGap policy can cost more premium than the Medicare Advantage Plan, also in the Medicare Advantage plan they may include Medicare Part D (Prescriptions), which is not usually covered under the MediGap plan.

Since MediGap and Medicare Part C plans are both an important aspect of coverage, you should always work with a professional health insurance agent to understand these terms thoroughly and make clear decisions.

If you are living in California, searching for a Southern California health agent, then Davidow Financial & Insurance Services is here to help you.

We will help you make the best decisions regarding your health insurance plans.