What Is a Section 105 Plan?

Section 105 provides for an employer-sponsored Health Reimbursement Account (HRA) used to reimburse employees for those medical expenses that are not covered due to a high deductible. Funded by the employer, an HRA gives employees the opportunity to receive reimbursements tax-free and makes it possible for companies to buy a higher-deductible plan, saving everyone money. With an HRA, Employers and employees can work together to keep insurance costs down.

What is a Section 125 Plan?

Available through a Section 125 Plan, a “Premium Only Plan” (POP) gives employees the option to pay for their share of group insurance premiums with pre-tax earnings. A “Flexible Spending Account” (FSA) extends this benefit to allow employees to pay many non-reimbursed dental and dependent care expenses on a pre-tax basis, also.

What is an IRS Section 132 Plan?

A Section 132 Plan gives employees the opportunity to pay for parking and transit costs with pre-tax funds set aside for travel expenses related to commuting to and from work. Expenses that can be used against this account include monthly transit receipts, ticket stubs from the bus or train, and parking receipts. With this account, funds can accumulate and be rolled over from year to year, and changes to the account can be made monthly.

How Does the Section 125 FSA Work for the Participant?

Participants can use their FSA to cover expenditures for themselves, their spouses, or eligible dependents (such as children, siblings, parents and others for whom they can claim an exemption).

Covered expenses include:

• Medical costs that are not reimbursed, including medical deductibles and co-pays
• Child and dependent-care costs
• Prescription and certain over-the-counter drugs
• Un-reimbursed dental expenses
• Contact lenses, eyeglasses and exams
• And more (see the list of examples provided in the participant information package)

For complete details of eligible expenses, you can also check the IRS website at www.irs.ustreas.gov

COBRASOURCE Makes Setting Up and Managing a Section 125 Cafeteria Plan Simple!

You do not have to redesign your existing insurance and benefit programs to take advantage of a
Section 125 Cafeteria Plan. The premium payments or FSA-elected deductions are handled by your payroll department – deductions are simply converted to pre-tax rather than after-tax. COBRASOURCE can help with implementing this type of program.

The requirements for installing a Section 125 Cafeteria Plan are to prepare the appropriate plan documents and have all eligible employees make their benefit elections. A Summary Plan Description detailing the plan’s eligibility requirements, benefits and election requirements, must be given to all employees who enroll. COBRASOURCE creates and customizes the plan for you and we will provide documentation, such as the FSA explanation and enrollment brochure for your employees.

COBRASOURCE Takes the Hassle Out of Managing a Section 125 FSA Plan.

COBRASOURCE takes care of your needs,

Day to Day – If you or an employee has a question or problem, COBRASOURCE administrators can be reached during office hours at (847) 223-1011 or (866) 923-4243 (toll free).

Month to Month – If an employee has a question about a claim, or is inquiring whether or not their “change in status” event constitutes an election change.

Year to Year – with employee enrollment, re-enrollment, reminders, plan changes, and with help in preparing any necessary IRS documentation