Q&A: Section 125 Plans

Answers are provided by Robyn Morris of R. C. Morris, Incorporated

Welcome to the column! Here are answers to questions from employers who sponsor Section 125 plans (also known as "flex" or "cafeteria" plans).

The author of this column is Robyn Morris, President of R. C. Morris, Incorporated.

Ms. Morris is the author of the popular Flexible Benefits Answer Book, published by Panel Publishers.

Q&A 159: Can a change in status and related change in coverage also benefit other family members?: June 25, 1999
Q&A 158: Can employee drop coverage in mid-year if his spouse's coverage looks better?: June 25, 1999
Q&A 157: S corporation sponsor -- ineligible employees.: June 25, 1999
Q&A 156: Is there a 31-day requirement for Section 125 Plan enrollment?: June 25, 1999
Q&A 155: How can a participant remain in a Medical Reimbursement Account while on a leave of absence?: June 25, 1999
Q&A 154: Changing to a short plan year: March 23, 1999
Q&A 153: Unmarried parents of a child and changes in family status: March 23, 1999
Q&A 152: Publication of qualified medical expenses?: March 23, 1999
Q&A 151: Can a plan require participation after termination?: March 23, 1999
Q&A 150: Individual term life insurance in a Cafeteria Plan?: March 23, 1999
Q&A 149: Can a sole proprietor or partnership implement a Sec. 125 Plan?: March 23, 1999
Q&A 148: What happens if employee misses deadline?: March 23, 1999
Q&A 147: Deadline for claims documentation is before end of plan year...: March 23, 1999
Q&A 146: Issue a 1099 for "excess reimbursement"?: February 18, 1999
Q&A 145: All about premium reimbursements for individually-owned insurance: February 15, 1999
Q&A 144: If insurance is 100% employer-paid, is it subject to Section 125?: February 15, 1999
Q&A 143: Dependent Care vs. Medical Reimbursement pay-out: February 15, 1999
Q&A 142: Can an employer raise required employee contributions mid-year?: February 15, 1999
Q&A 141: Dependent care needs not clear at time of enrollment -- OK to change later?: February 15, 1999
Q&A 140: How does a W-2 show Section 125 Plan benefits?: February 15, 1999
Q&A 139: Change plan design mid-year?: February 15, 1999
Q&A 138: Are multiple entry dates during the plan year permitted?: February 15, 1999
Q&A 137: Terms - defined: February 15, 1999
Q&A 136: Additional vacation time outside of Section 125?: February 15, 1999
Q&A 135: How quickly must claims be paid for Dependent Care?: February 15, 1999
Q&A 134: Link a Section 403(b) Plan into a Section 125 Plan?: February 15, 1999
Q&A 133: Medical Reimbursement Account and Termination: February 15, 1999
Q&A 132: Premium payment for non-employees through Sec. 125 Plan?: February 15, 1999
Q&A 131: Can a participant contribute to Dependent Care only in the summer?: January 19, 1999
Q&A 130: All employees are owners...: January 18, 1999
Q&A 129: What about automotive and parking expenses?: January 18, 1999
Q&A 128: Did the employee really have a qualifying event?: January 18, 1999
Q&A 127: When is the effective date of participation?: January 18, 1999
Q&A 126: Description of Premium Conversion: January 18, 1999
Q&A 125: What is an SPD?: January 18, 1999
Q&A 124: Federal requirements for maximum contributions?: January 18, 1999
Q&A 123: What is the Best 12-Month Period for a Plan Year?: January 5, 1999
Q&A 122: Can participants switch coverage when new coverage is added?: January 5, 1999
Q&A 121: Paying for supplemental insurance on a pre-tax basis: January 2, 1999
Q&A 120: FSA Plan at corporate location, only?: December 31, 1998
Q&A 119: Employer's responsibility regarding dependent care provider: December 31, 1998
Q&A 118: Adding dental coverage mid-year -- can employees make a change?: December 31, 1998
Q&A 117: Open enrollment deadlines or premium payments in December for the upcoming January?: December 31, 1998
Q&A 116: Can a company reduce its payroll-related insurance expense w/ 125?: December 31, 1998
Q&A 115: Can terminated employee get balance in reimbursement account?: December 29, 1998
Q&A 114: Pre-tax, employee-paid dependent care without a Section 125 Plan?: December 29, 1998
Q&A 113: Limitation on amount of group health insurance premium?: December 29, 1998
Q&A 112: Correction of error after plan year begins: December 29, 1998
Q&A 111: Qualifying Event Questions: December 29, 1998
Q&A 110: Pre-tax dollars for other health policies such as Medigap?: December 29, 1998
Q&A 109: How to decide upon Benefit Credits in a Plan?: December 29, 1998
Q&A 108: Maximum Medical FSA limit per year: December 29, 1998
Q&A 107: Medical Savings Account and Sec. 125 Medical FSA together?: December 29, 1998
Q&A 106: Adding health insurance mid-year without qualifying event: December 29, 1998
Q&A 105: Merger/Acquisition question: December 28, 1998
Q&A 104: Preparation of a Section 125 Plan Document: December 28, 1998
Q&A 103: What is "Earned Income" for purposes of the Dependent Care limits?: December 28, 1998
Q&A 102: Change in family status question: December 28, 1998
Q&A 101: Drop insurance coverage mid-year under Section 125?: December 28, 1998
Q&A 100: Premiums in a Medical FSA?: December 28, 1998
Q&A 99: Multiple Section 125 Plans at one company: December 28, 1998
Q&A 98: Too much paid out - employee halted contributions during the year: December 28, 1998
Q&A 97: Open Enrollment and SPD Questions: December 28, 1998
Q&A 96: Long-Term Care and Section 125 Plans: December 28, 1998
Q&A 95: Employee not available to make timely election...: December 28, 1998
Q&A 94: Form 5500 filing and SPD questions: December 28, 1998
Q&A 93: Services must be incurred during the plan year: July 14, 1998
Q&A 92: How does IRS determine the $50,000 term life insurance limit?: July 14, 1998
Q&A 91: Disparity of benefits under the plan?: July 14, 1998
Q&A 90: Allowing new participants into reimbursement accounts mid-year: July 14, 1998
Q&A 89: Listing of qualified reimbursement account expenses: July 14, 1998
Q&A 88: How long must I wait for a medical reimbursement claim to be paid?: July 9, 1998
Q&A 87: Can the Medical FSA reimburse only the amount contributed to-date?: February 26, 1998
Q&A 86: Can a not-for-profit organization implement a Section 125 Plan?: February 26, 1998
Q&A 85: When must an eligible employee enroll in the plan?: February 26, 1998
Q&A 84: Terminology: Cafeteria Plan vs. Section 125 Plan: February 26, 1998
Q&A 83: Can unused vacation days fund 401(k) deferrals in a Sec. 125 Plan?: February 26, 1998
Q&A 82: When is a Medical FSA claim INCURRED?: February 25, 1998
Q&A 81: What is the 12 month period for the $5,000 dependent care maximum?: February 25, 1998
Q&A 80: Filing a late Form 5500: February 25, 1998
Q&A 79: Pre-paid legal in a Section 125 Plan?: February 25, 1998
Q&A 78: Whole life insurance in a Section 125 Plan?: February 25, 1998
Q&A 77: Can employer offer coverage for spouse and dependents, only?: February 25, 1998
Q&A 76: Contribution limits: February 25, 1998
Q&A 75: Can a Plan Sponsor charge more than the actual premium cost?: February 25, 1998
Q&A 74: Does the IRS discriminate against married couples?: February 25, 1998
Q&A 73: Can an owner of an S-corp AND C-corp participate in a Sec. 125 Plan?: February 20, 1998
Q&A 72: How long to submit claims after the end of a plan year?: February 20, 1998
Q&A 71: Taxable cancer or life insurance benefits?: February 20, 1998
Q&A 70: Must Cafeteria Plan contributions be held in Trust?: February 20, 1998
Q&A 69: Qualified Transportation Expenses in a Medical FSA: February 20, 1998
Q&A 68: Opting out of health insurance - no Section 125 Plan in place: February 20, 1998
Q&A 67: Limit the amount of reimbursement to the amount contributed to date?: February 20, 1998
Q&A 66: What is a Cafeteria Plan?: January 21, 1998
Q&A 65: Individual health insurance in a Section 125 Plan: January 12, 1998
Q&A 64: How long is a key employee a key employee?: January 12, 1998
Q&A 63: Short-term disability in a Section 125 Plan: January 12, 1998
Q&A 62: Spouse's change of job results in less coverage - qualified change?: January 12, 1998
Q&A 61: Key Employee 25% concentration test: January 12, 1998
Q&A 60: Making use of forfeitures from a Section 125 Plan: January 12, 1998
Q&A 59: Long Term Care Expenses in a Section 125 Plan?: January 12, 1998
Q&A 58: Change in level of health coverage provided - qualified change?: January 12, 1998
Q&A 57: Improper operation of a Flexible Spending Account: January 12, 1998
Q&A 56: Adoption Assistance and Expenses: January 12, 1998
Q&A 55: Ex-spouse has a job change - change in family status?: January 12, 1998
Q&A 54: Maximum Contribution limits for FSAs: January 12, 1998
Q&A 53: Listing of FSA qualified expenses: January 9, 1997
Q&A 52: Use of a Third Party Administrator: January 9, 1998
Q&A 51: Section 125 and employer deduction limits for profit sharing plans: January 9, 1998
Q&A 50: Mandatory participation: January 9, 1998
Q&A 49: Basic Questions on Cafeteria Plans: January 9, 1998
Q&A 48: S-Corp owner may not participate in a Section 125 Plan: January 9, 1998
Q&A 47: Uniform Coverage in a Health Care Reimbursement Account: January 8, 1998
Q&A 46: Enrollment and Mid-Plan Year changes: January 8, 1998
Q&A 45: Employer's Entitlement to Interest on Unused Dollars: November 20, 1997
Q&A 44: Exclusion of Owners or Shareholders: November 20, 1997
Q&A 43: Form 5500 Guide?: November 20, 1997
Q&A 42: "Full Flex" Plan and "Premium Only" Plan Defined: November 20, 1997
Q&A 41: Date of Service for Expense Reimbursement in FSA: November 20, 1997
Q&A 40: Long Term Disability in a Flexible Benefit Plan: November 20, 1997
Q&A 39: Communications Before Beginning of Plan Year: November 20, 1997
Q&A 38: Adding New Benefits to an Existing Plan: November 20, 1997
Q&A 37: Premium is Pre-tax if Withheld for Coverage During Later Month?: November 20, 1997
Q&A 36: Vacation Days in a Section 125 Plan: November 20, 1997
Q&A 35: How to Price Benefit Costs: November 20, 1997
Q&A 34: Medical FSA contribution limit: November 20, 1997
Q&A 33: Notification to IRS of Plan: November 20, 1997
Q&A 32: Adverse Selection By Married Couple Employees: November 20, 1997
Q&A 31: Proof of Change in Family Status: November 20, 1997
Q&A 30: Dependent Care Change in Cost of Coverage: November 20, 1997
Q&A 29: Discrimination and Dependent Care Assistance Plans: October 20, 1997
Q&A 28: Change in Family Status and Account Balance: October 20, 1997
Q&A 27: Promotion to an Ineligible Class - COBRA Right to Benefits?: October 20, 1997
Q&A 26: Section 125 Plans in Mergers and Acquisitions: October 13, 1997
Q&A 25: Borrowing From a Section 125 Plan: October 13, 1997
Q&A 24: Change in Family Status and Account Balance: October 13, 1997
Q&A 23: Participation in Dependent Care Reimbursement After Termination: September 16, 1997
Q&A 22: Retroactive Change In Family Status: September 9, 1997
Q&A 21: Medical Reimbursement Account and Terminated Employee: August 4, 1997
Q&A 20: Does a Section 125 Plan Make Sense For A Small Company?: August 4, 1997
Q&A 19: Rehired Employees: July 30, 1997
Q&A 18: Required Items in Plan Document: July 22, 1997
Q&A 17: Change in Medical Plan Coverage - Qualified Reason to Change Election?: July 21, 1997
Q&A 16: After-Tax Election of Benefits: July 16, 1997
Q&A 15: Form 5500 for Section 125 Plans Sponsored by Governmental Employers: July 16, 1997
Q&A 14: Termination of Medical Reimbursement Account Participant: July 11, 1997
Q&A 13: Taxation of LTD Benefits Paid Under Cafeteria Plan: June 4, 1997
Q&A 12: Premium Conversion Plans and DOL Filings: May 19, 1997
Q&A 11: Placement in a Nursing Home as a Change in Family Status: May 19, 1997
Q&A 10: Coordinating Opt-Out Allowances With Section 125 Plan Benefits: April 29, 1997
Q&A 9: Effect of Dependent Care Expense Reimbursements on the Child Care Tax Credit: April 21, 1997
Q&A 8: Cost of Pre-Natal Vitamins: Can Be Reimbursed Only If Prescribed: April 14, 1997
Q&A 7: Lowering Employer Risks Under Medical Expense Reimbursement Accounts: April 7, 1997
Q&A 6: Use of Section 125 Plan by the Company's Owner: March 31, 1997
Q&A 5: Annual Limit on Contributions to Medical Reimbursement Accounts: March 24, 1997
Q&A 4: Annual Form 5500 Filing Requirements for 125 Plans: March 24, 1997
Q&A 3: Public Transportation Benefits Under 125 Plans: March 24, 1997
Q&A 2: What Benefits May Be Offered Under 125 Plans: March 24, 1997
Q&A 1: What Does a Section 125 Plan Do?: March 24, 1997

Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. The laws, regulations and court decisions in this area change frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the laws, regulations or court decisions that occur after the date on which that Q&A is posted.