Your Compliance Edge

General Benefits Terms


- C -

Childcare assistance: Provides either the full or partial cost of caring for an employee's children in a nursery or daycare center or by a babysitter. Care can be provided in facilities either on or off the employer's premises.

- D -

Dependent care reimbursement accounts: Also known as flexible spending accounts, dependent care reimbursement accounts can be part of a flexible benefit plan or stand alone. Employees participating in these accounts allocate a declared pretax amount, up to a set limit, for out-of-pocket qualified expenses, including childcare, elder care, or services to a disabled dependent. Any money not used by the end of the plan year is forfeited.

- E -

Employee assistance program (EAP): A structured plan, closely related to employee wellness programs, that typically deals with more serious personal problems than the essentially medical problems covered by wellness programs. EAPs can offer referral services, or referral services in combination with counseling services. Both the referral services and the counseling services may be supplied by company personnel, by an outside organization under contract, or by a combination of both.

- F -

Financial planning: A service to help employees make decisions related to savings, borrowing, investing, home purchases, education expenses, and retirement income.

Flexible benefit plans: Also known as cafeteria benefit plans, flexible benefit plans are operated under provisions of Section 125 of the Internal Revenue Code. Section 125 allows employees to make a choice between cash (taxable) and noncash (nontaxable) benefits. The code permits companies providing flexible benefit plans to offer employees the following options: accident and health insurance plans, including health care spending accounts; group term life insurance and dependent coverage; disability benefits and accidental death and dismemberment plans; employee contributions to 401(k) plans or other thrift or savings plans (either pretax or after tax); dependent care assistance plans, including spending accounts; vacation days; and group legal services. Flexible benefit plans may be funded solely by the employer or through joint employer-employee contributions. Employers usually grant each employee credits to purchase benefits covered by the plan. Many plans include a core group of benefits (for example, life insurance coverage of $25,000) and allow employees to purchase additional levels of the core benefit as well as benefits not included in the core group. An example would be offering an additional $20,000 in life insurance coverage.

Flexible work schedule: Permits employees to set their own schedules within a general set of parameters. Employees generally are required to work a minimum number of core hours each day.

Flexible workplace: Permits workers to work an agreed-upon portion of their work schedule at home or some other approved location, such as a regional work center. Such arrangements are especially compatible with work requiring the use of computers linking the home or work center to the central office.

- H -

Health care reimbursement accounts: Also known as flexible spending accounts, health care reimbursement accounts can be part of a flexible benefit plan or stand alone. Employees participating in these accounts allocate a declared pretax amount, up to a set limit, for out-of-pocket health care expenses such as deductibles, copayments, coinsurance, and other qualified health care expenses not covered by their health insurance. Any money not used by the end of the plan year is forfeited.

Health savings accounts (HSAs): Portable accounts owned by employees and used to pay for medical expenses with tax-exempt contributions. HSAs are used in combination with employer-provided high-deductible health plans (HDHPs) with annual maximum limits on out-of-pocket and deductible expenses. Other features include the rollover of unused contributions from year to year and tax-free interest.

- L -

Long-term care insurance: A health plan that provides long-term (more than 1 year) custodial care, home care, or nursing home care. Coverage may be extended to active employees, retirees, parents of active employees, or dependents of active employees and retirees. Premiums are generally, though not necessarily, paid by employees. These plans are separate from coverage for extended care facilities or home health care found in health insurance plans that provide posthospitalization benefits for a limited period.

- P -

Pretax savings with no employer contributions: These are cash or deferred arrangements used to fund savings and retirement plans authorized by section 401(k), 403(b), or 457 of the Internal Revenue Code. The employees' contributions reduce their salaries for tax purposes.

- R -

Retiree health care: A health plan that provides coverage to a retiree beyond what is mandated by COBRA or other health continuation laws. Coverage must include provisions typically found in a medical plan, such as hospitalization and doctor's care. The retiree plan does not have to be the same plan provided to active employees, nor does it matter whether the retiree pays the entire premium. Plans that cover only dental, vision, or prescription drugs are not included.

- W -

Wellness programs: A structured plan, independent from health insurance, that offers employees two or more of the following benefits: smoking cessation programs, exercise/physical fitness programs, weight control programs, nutrition education, hypertension tests, periodic physical examinations, stress management programs, back care courses, and life style assessment tests.