Welfare Benefit Plans

Welfare Benefit Plans

What is a welfare benefit plan?

An employee welfare benefit plan is any plan, fund or program established and maintained by an employer for the purpose of providing employees with benefits in addition to wages, such as medical insurance, life and disability insurance, vacation benefits, day care, educational training, etc.

Parmenter O’Toole’s employee benefits attorneys have experience both drafting employee welfare benefit plans, including cafeteria plans and medical expense reimbursement plans, and assisting clients in making sure their employee benefits are provided according to Internal Revenue Service regulations, including nondiscrimination testing.

What benefits can be provided in a section 125 cafeteria plan?

An often underutilized employee benefit is described in Section 125 of the Internal Revenue Code, and is commonly called a “cafeteria plan.” A cafeteria plan allows employees to withhold pretax dollars from their salary to cover certain benefits, including:

  • Medical expense reimbursements
  • Health spending account benefits
  • Group term life insurance coverage up to $50,000
  • Long and short term disability coverage
  • Dependent care assistance
  • Adoption assistance programs
  • Premiums for COBRA continuation coverage
  • Qualified health spending account distributions

It is important to remember that the employer must maintain a written cafeteria plan document, provide employees with required notices, and make sure the plan is updated for changes in the law. Our employee benefits attorneys can help you design a new plan, or review your existing plan to ensure it complies with current legal requirements.

What expenses can be paid by a medical expense reimbursement plan?

A medical expense reimbursement plan is designed to pay (with pretax dollars) those health, prescription, dental and vision expenses not covered by insurance. Medical expenses can include such things as eyeglasses, transportation to required doctor visits, certain over-the-counter drugs, etc. If you have a question regarding what can be paid for with a medical expense reimbursement plan, our employee benefits attorneys can provide guidance based on the latest Internal Revenue Service rules and regulations.

Related Services: Retirement Benefits; Executive Compensation; Employee Benefits

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