Section 125 Cafeteria Plans

Section 132

Requirements

Premium Only Plan

Health Savings Account (HSA)

Health FSA

Adult/Child Dependent Care

Adoption Assistance

Transportation Benefit Plan

Plan Document

Yes

No, but recommended for clarification and employee education

Yes

Yes

Yes

No, but recommended for clarification and employee education

Employee Contributions

Employee share of health insurance

Limited to the lesser of insurance deductible amount or indexed amount ^‡‡‡

Unlimited dollar amount

Up to $5,000 per year

Up to $10,390 per year per adoption

$195 per month for parking, $100 per month for transit passes and commuter highway vehicle

Employer Contributions

Not required

Not required

Not required

Not required

Not required

Not required

Use It Or Lose It

No*

No^‡

Yes

Yes

Yes

No‡

Employee Tax Savings⁺

$25 to $40 for every $100 contributed

$25 to $40 for every $100 contributed

$25 to $40 for every $100 contributed

$25 to $40 for every $100 contributed

$17 to $38 for every $100 contributed

$25 to $40 for every $100 contributed

Employer Tax Savings⁺⁺

7.65% of employee contribution

7.65% of employee contribution

7.65% of employee contribution

7.65% of employee contribution

None

7.65% of employee contribution

Claims

None

Not required for disbursements, claim substantiation upon audit

Yes

Yes

Yes

Yes,‡‡ or employer may be required to provide transit passes

Annual IRS-DOL Form 5500 (no tax due)

No

No

Yes, generally if funded and/or over 100 participants

No

No

No

^*

Loss of employee contribution may occur when underlying insurance coverage is dropped without a valid change-of-status
(i.e., family status, full-time to part-time work, or change in premium amount).

⁺

Savings include employee FICA, federal tax, and state income tax where applicable, except for New Jersey.

⁺⁺

Savings will be less for employee earnings in excess of FICA base.

‡

Excess funds can be rolled from month to month and plan year to plan year.

‡‡

Employers are not allowed to reimburse for mass transit expenses if vouchers are "readily available."

‡‡‡

Single coverage - $1,000 to $2,600, family coverage - $2,000 to $5,150 for 2004.