Core Documents

  Employers today are under increasing pressure to offer competitive benefits while controlling costs. One of the most effective—and often overlooked—tools in their toolkit is the Section 125 Premium-Only Plan (POP). Proper plan design under Section 125 of the Internal Revenue Code empowers both companies and their employees to save on payroll taxes and boost take-home pay. What Is a  Section 125 Plan Design ? A Section 125 plan, commonly referred to as a  cafeteria plan , allows employees to choose between taxable compensation (like cash) and qualified non-taxable benefits. A Premium-Only Plan (POP) is a simple variant of this cafeteria model that focuses exclusively on pre-tax contributions for insurance premiums (health, dental, vision, group-term life, etc.). By design, POPs restrict the benefits to eligible premiums—if you add extra perks like flexible spending accounts (FSAs), it’s no longer a pure POP. Core Elements of POP Plan Design Written Pl...

  In today's competitive job market,   HRA for small businesses   must offer attractive perks to attract and retain top talent. One powerful tool is the Health Reimbursement Arrangement (HRA), a flexible employee benefit that allows employers to reimburse medical expenses tax-free. For small businesses, HRAs provide a cost-effective way to enhance employee wellness without breaking the bank. This article explores how HRAs work, their benefits, and practical designs inspired by innovative group plans. What is an HRA? An HRA is an employer-funded account that reimburses employees for qualified medical, dental, and vision expenses. Unlike traditional health insurance, HRAs are not insurance plans but reimbursement programs. Employers set annual contribution limits, and employees submit claims for out-of-pocket costs like doctor visits, prescriptions, or even over-the-counter items. The key advantage? Both contributions and reimbursements are tax-free for employees, reducing ...

  The term   Section 105 HRA   refers to a specific type of employer-sponsored health benefit, governed by U.S. tax law under § 105 of the Internal Revenue Service (IRS) rules. More precisely, it pertains to a health reimbursement arrangement (“HRA”) that allows an employer to reimburse employees for eligible medical expenses on a tax-advantaged basis. Here’s a breakdown of how such a plan works, why it matters, and key compliance issues to keep in mind. What is a Section 105 HRA? A Section 105 HRA is an employer-funded arrangement under which: The employer sets up the plan and funds it (employees do not contribute via salary reduction). The plan reimburses eligible medical or health-care expenses incurred by the employee (and often spouse, dependents) in accordance with §213(d) of the tax code. Reimbursements are typically tax-free to the employee (i.e., not included in the employee’s gross income) provided the arrangement qualifies. Why employers use Section 105 HRAs Ta...