Vermont employers have a wide range of options under the general heading of Flexible Benefit or Cafeteria Plans, including Flexible Spending Accounts (FSA's), Premium-Only Plans (POP), employer-funded Flex Dollars, and most recently, the ability to redirect pre-tax earnings to Health Savings Accounts (HSA's). A Flex Plan offers a relatively inexpensive means for Vermont companies to enable employees to contribute a portion of their salary to designated accounts in pre-tax dollars (exempt from federal and often state income taxes as well as Social Security and Medicare taxes) to pay or be reimbursed for eligible expenses.

An employer can also make tax-free contributions to the Flex Plan, which employees can then elect to have applied toward their share of premiums for employer-sponsored benefits and/or assign to special FSA accounts to be used for eligible expenses.

Let Benefit Design and Strategies LLC demonstrate how this meaningful benefit can help your employees while also generating tax savings for your Vermont company. Contact BDS

We can assist you in selecting the most appropriate program to meet your objectives and evaluate whether your firm might self-administer your plan or engage the services of a third party administrator (TPA). For a modest price, Benefit Design and Strategies is able to prepare the plan document necessary to implement certain of these plans. We also work with several reputable Vermont-based TPA's specializing in Flex Plan administation.

What Can Be Offered Under a Section 125 Plan?

Up to four different accounts can be offered under a Section 125 Plan:

1. Premium Conversion Account or Premium Only Plan (POP) - The employee's share of premiums for employer-sponsored plans are paid in pre-tax dollars
2. Medical Expense Reimbursement Account or Flexible Spending Account/FSA - Employees voluntarily authorize to redirect a designated amount of each paycheck into their special account to pay for out-of-pocket medical and medically-related goods and services incurred by the employee and his/her family;
3. Dependent Care Reimbursement Account - An employee can voluntarily elect to a designate pre-tax dollars to pay for tax-qualified dependent care for a child/children or a dependent adult;
4. Redirection of Pre-Tax Funds to HSA Account - An employee participating in both the Flex Plan and an HSA medical plan can voluntarily elect to have a portion of each paycheck deposited directly into his/her HSA account in pre-tax dollars to be used to pay for un-reimbursed medical and medically-related goods and services for the employee and his/her family members, even if they are covered by a different medical plan. Unused funds accumulate from year to year and earn interest.

In summary, Flex Plans empower Vermont employers to offer a unique benefit at little or no cost, plus owners realize tax savings on every dollar employees allocate to the Flex Plan. At the same time employees are able to reduce their own federal and even Vermont tax liability.