With the upward trend in employee benefit costs, especially health care costs, cafeteria plans can be a solution to providing these benefits at a reduced cost to the business and its employees. Cafeteria plans are becoming an increasingly popular way of providing employee benefits because both employers and employees find them advantageous and they are relatively easy to administer. Employers benefit by maximizing tax deductions as well as reducing payroll costs. Employees are able to increase their take-home pay by paying for benefit coverage on a pretax basis.

To qualify for special tax treatment, a cafeteria plan must meet very specific requirements. The plan must be in writing and contain certain information that is set forth by the IRS. PPC’s Guide to Cafeteria Plans provides easy-to-understand coverage of the unique requirements for establishing and operating a cafeteria plan. It includes information on permitted and prohibited benefits, enrollment, nondiscrimination testing, and disclosure requirements, as well as sample plan documents and checklists that can be used to quickly and efficiently monitor a plan’s compliance with the various cafeteria plan requirements. The Guide also contains marketing tools, letters, and step-by-step guidance that can help practitioners sell cafeteria plan implementation and operation engagements.

Other features of this Guide that make it a Must Have include:

• Additional examples regarding contributions to HSAs have been added.
• A comprehensive example on contributions and benefits testing has been added.
• The IRS issued new regulations under IRC Sec. 7216 that restrict the use of tax return information. These regulations greatly impact a practitioner’s marketing efforts. A new section has been added to this Guide discussing the new regulations.
• The engagement letter has been updated to reflect the new Section 7216 rules, as well as other important matters.
• The discussion on Internet marketing has been expanded.
• Recently enacted laws have provisions with ramifications for benefits provided under cafeteria plans. Applicable provisions discussed in this most recent edition are:

• For plan years beginning after October 2, 2009, Michelle’s Law provides for continued health care coverage for dependent college students who take a medically necessary leave of absence from school. This impacts health plans that may be required to provide coverage to an individual who no longer qualifies as a dependent.
• The Fostering Connections to Success and Increasing Adoptions Act of 2008 added new requirements for determining if an individual qualifies as a dependent for such benefits as health care and dependent care coverage. The Act also allows a child of divorced or separated parents to be treated as a dependent for health benefits by both parents.
• The 2008 Genetic Information Nondiscrimination Act (GINA) amends HIPPA rules by adding provisions that restrict the acquisition and use of an individual’s genetic information by group health plans. The provisions are applicable to all group health plans, regardless of the number of employees covered under the plan.

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