Also called "Section 125" plans, or "cafeteria" plans, flexible benefit plans can include a host of different approaches for enhancing the value of employee benefit programs.

Premium Only Plans

Section 125 of the Internal Revenue Code gives tax-free status to employee earnings that are spent on insurance premiums. Popularly called Premium-Only Plans, or "POP" plans, these plans make it affordable for employees to pay for the insurance coverage they need, and make it possible for an employer to offer choice without increasing the company's costs. For example, if the bargain basement HMO plan is not suitable for those employees with college-age children many states away, a more expensive PPO plan could be offered as an option, with the difference in cost paid, pre-tax, by the employee.

Flexible Spending Accounts

Flexible Spending Accounts are an increasingly popular component of flexible benefit plans. An employee may redirect a portion of his salary into a flexible spending account (FSA) and pay no taxes, including Social Security tax, on this redirected money. There are two types of FSAs. A Health FSA pays for health care expenses not covered or paid by insurance. A Dependent Care FSA pays for child care or day care for an elderly parent that is necessary in order for the employee to work.

Savings and Choice

A well designed flexible benefits plan provides savings and choice, the two attributes that employees rate most highly, next to salary, when evaluating employer-sponsored benefits. Just as employees save money on their tax-free benefits, employers save too, by reducing FICA and Social Security payroll taxes. For every dollar an employee spends on pre-tax health premiums or redirects into an FSA, an employer’s payroll tax is reduced by 7.65%. The savings means that a flexible benefits plan usually pays for itself. It is easy to install and administer.

IHS Makes It Easy

An employer doesn’t need an army of HR folks or a ton of forms – Innovative Health Services is in the business of making employee benefits truly a benefit -not a burden- for employers and their employees.