Section 125 plans, or cafeteria plans, refer to a type of insurance plan that meets the specific requirements of Section 125 of the Internal Revenue Code. Section 125 of the Internal Revenue Code was enacted in 1969 and provides a special exception to the federal income tax rules, which allows the employee to purchase the benefit using pre-tax dollars. A cafeteria plan allows employees to select among a variety of nontaxable benefits (e.g. the fixed Indemnity Health plan) and cash (e.g. salary). Cafeteria plans allow employees to receive qualified benefits through pre-tax dollars using employee salary reductions. With a cafeteria plan, the premium payments are deducted from your wages before your employer calculates your social security and Medicare taxes and federal withholding. Therefore, the premium payments associated with a Section 125 cafeteria plan reduce your gross income, which may create potential tax savings to you.

Generally speaking, a fixed indemnity health plan is a supplemental plan that pays individuals a specified amount of cash for the occurrence of a qualified medical event as defined in Section 213(d) of the IRS Code. Fixed indemnity health plans are intended to protect you from unexpected health costs.

The Fixed Indemnity Health plan does not take advantage of any new or undiscovered tax loophole. The Fixed Indemnity Health plan is a cafeteria plan, which is a type of insurance plan that meets the specific requirements of Section 125 of the Internal Revenue Code. A cafeteria style benefit plan allows employees to select among a variety of nontaxable benefits (e.g. the Fixed Indemnity Health plan) and cash (e.g. salary). Cafeteria plans operate under a special provision of the Internal Revenue Code – Section 125. Section 125 of the Internal Revenue Code was enacted in 1969 and provides a special exception to the federal income tax rules, which allows the employee to purchase the benefit using pre-tax dollars. Examples of benefits that are offered through cafeteria plans are: health insurance, supplemental voluntary benefits, short-term and long-term disability insurance, 401(k) plan contributions for retirement, and contributions to Health Savings Accounts (HSAs). While there is no guarantee that the Internal Revenue Code will not be amended or changed in the future, it is unlikely that the federal government will amend or repeal Section 125 of the Internal Revenue Code as many types of employee benefits are offered through cafeteria style plans.

No. The Fixed Indemnity Health plan does not affect your current major medical health plan coverage. The Fixed Indemnity Health plan is a supplemental plan that is separate and apart from your current medical coverage or other coverage that your employer may offer. Your major medical insurance coverage provides insurance coverage for physician and hospital claims. The Fixed Indemnity Health plan is a supplemental plan that provides indemnity claim benefit payments upon the occurrence of a medical event that has been assigned a Current Procedural Terminology (“CPT”) code. The indemnity claim benefit payments paid to you are for payment or reimbursement for out-of-pocket qualified medical expenses you may incur.

A Health Reimbursement Account, or HRA, is an account set up by your employer. An HRA allows your employer to provide a type of health benefit without offering a group health insurance plan. Once set up, your employer sets aside a fixed amount of money to deposit to your HRA each year for you to use. You may use the money in the HRA to reimburse yourself for many health care expenses. Only your employer is permitted to deposit money into an HRA. The Fixed Indemnity Health plan is not an HRA account. The Fixed Indemnity Health plan is a fully-insured indemnity plan that provides indemnity benefit payments upon the occurrence of a qualified medical event as defined in Section 213(d) of the IRS Code. The indemnity benefit payment is paid to you to either pay for or reimburse you for qualified medical expenses you may incur.

The Fixed Indemnity Health plan is a supplemental plan that provides indemnity benefit payments upon the occurrence of a qualified medical event as defined in Section 213(d) of the IRS Code. The indemnity benefit payment is paid to you to either pay for or reimburse you for qualified medical expenses you may incur. You will receive a set amount as an indemnity claim payment for each month that you complete a qualifying service. A qualifying service is a medical event that is defined in Section 2113(d) of the IRS Code and can be accessed through the Fixed Indemnity Health plan’s platform. The indemnity benefit payment you receive will depend upon the coverage you purchased through the Fixed Indemnity Health plan.