What's on the Menu for Cafeteria Plans? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

What's on the Menu for Cafeteria Plans?

by on
in Employee Benefits Program,Human Resources

Q. Our corporate officers are in their 60s. Can we set up a tax-free cafeteria plan that provides long-term care assistance to them? S.J.T., Atlanta

A.
No. To qualify for the tax exclusion, a cafeteria plan must offer a choice between cash and certain qualified fringe benefits. Unfortunately, the list of IRS-approved benefits for this purpose does not include any products marketed, advertised or offered as long-term care insurance. Tip: Don’t be deterred. It’s generally possible to provide company-paid long-term care insurance to select employees. The benefits will represent a tax-free fringe to those employees (assuming your business is a C corp).

Leave a Comment