| Especially if you happen to be one of those | | | | flexible-spending account are exempt from |
| unflinchingly ambitious micro-business | | | | income, payroll, and unemployment taxes. This |
| entrepreneurs, I've been reading about everyday | | | | exemption generally also applies to payroll and |
| in pubs like Crain's Chicago Business, you'll | | | | unemployment taxes paid on behalf of employees. |
| eventually find that designing and offering up an | | | | (Take a look at IRS Pub. 15-B for exceptions, |
| attractive employee-benefits package will be an | | | | including treatment of highly compensated |
| essential component of your future growth. An | | | | employees and certain shareholders of |
| attractive health plan will do just that - attract - | | | | Subchapter S Corporation's.) |
| helping you recruit and retain crucial employees | | | | Premiums paid to a group life benefits policy are |
| (meaning those fought over creative class | | | | typically exempt from income and unemployment |
| knowledge worker types Richard Florida is always | | | | taxes. In addition, premiums paid for up to |
| yammering about). You'll also find that a generous | | | | $50,000.00 of benefits coverage per employee |
| group plan will help link your employees' interests | | | | tend to be exempt from payroll taxes. For |
| to your concern's. | | | | additional details, see IRS Publication 15-B. |
| That said, there are a seemingly unlimited number | | | | You see, cafeteria plans offer you some |
| of group benefits options to consider. One that | | | | versatility in putting together a benefits plan for |
| you'll want to move to the top of your list is a | | | | your workforce. There are other categories of |
| Cafeteria Plan. The cafeteria brand of benefit plan | | | | fringe benefits that you can offer your |
| can add a lot freedom to a employee | | | | employees in a cafeteria plan that may be |
| compensation package, allowing your workforce | | | | excluded from taxable income under IRS |
| to choose benefits options ala carte, if you will - | | | | benefit-exclusion rules. Using a flexible-spending |
| selecting only the benefit options they're most | | | | account -- namely, establishing a DCRA and HCRA |
| interested in. | | | | -- may help to jump-start a cafeteria plan for |
| Perhaps I should start closer to the beginning ... | | | | your workforce. If you maintain a cafeteria plan, |
| cafeteria plans, also known as the flexible | | | | the IRS requires you to complete IRS Form 5500. |
| spending account, the choice spending account or | | | | To help you keep track of employment-related |
| the section 125 plan, have become increasingly | | | | costs, the U.S. Bureau of Labor Statistics (BLS) |
| popular over the last few years because they're | | | | publishes a quarterly statistic called the |
| designed to offer employees a truly convenient | | | | employment cost index. The cost index measures |
| way to pay medical expenses with pre-tax | | | | changes in employee-compensation costs, which |
| dollars; relieving them of the burden of federal, | | | | include salaries, wages, and benefits. In addition to |
| and state taxes. | | | | publishing the quarterly cost index, BLS publishes |
| To take advantage of a flexible spending account, | | | | an annual survey of compensation costs. |
| eligible employees set aside a pre-designated | | | | One last thing ... the information above is |
| amount each year, in order to pay for medical | | | | practically for entertainment purposes and |
| expenses aren't already eligible for coverage. The | | | | shouldn't be interpreted as financial advice. For |
| two most common types of flexible-spending | | | | advice specific to your firm's circumstances, don't |
| accounts are dependent care reimbursement (also | | | | hesitate get advice from a financial, tax or |
| known as DCRAs) and health care reimbursement | | | | benefits consultant. You may even want to flat |
| accounts. Employees pay for non-reimbursed | | | | out hire an Interim benefits consultant or a full |
| expenses from these accounts. Unfortunately, | | | | service benefits consulting firm. There are also a |
| flexible-spending accounts are "use-it-or-lose-it" | | | | number of good sources of information on the |
| accounts; meaning that any funds leftover at the | | | | Web you can take advantage of. The Employee |
| end of the year can't be "rolled over," so to | | | | Benefits Research Institute (EBRI), International |
| speak. | | | | Foundation of Employee Benefit Plans (IFEBP), and |
| Exceptions To Those Limits Apply to Key | | | | American Benefits Council are independent |
| Employees | | | | sources of truly "actionable" employee-benefit plan |
| Typically, funds set aside in a cafeteria plan's | | | | information. |