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:

• Patient Protection and Affordable Care Act (Affordable Care Act). The most up-to-date guidance on major provisions of the Affordable Care Act impacting benefits that may be offered through a cafeteria plan is provided in the Guide. Additionally, the delayed effective dates of several of the Act’s provisions are noted.
• New Health Plan Disclosure Requirements. Beginning in 2012, employer-sponsored health plans must provide a summary of benefits and coverage (SBC) to certain plan participants. Discussions about of this new reporting requirement and the penalties for not complying with the new rules are included in this update.
• New Health FSA Contribution Limit. For plan years beginning after 2012, contributions to health FSAs must be limited to $2,500. Discussion of this new requirement has been added to this Guide.
• Expiring Income Exclusion for Adoption Assistance. Absent new legislation, the income exclusion for adoption assistance will not be available after 2012. This edition discusses how this may impact adoption assistance plans.