The HRA has the most flexibility of any pre-tax account. As the employer, you choose the amount of the benefit, the eligible expenses for reimbursement, and whether to include a rollover provision. (Photo: Shutterstock)
Pre-tax salary withholding plans come in many shapes and sizes. You may even hear them referred to by several different names like cafeteria plans, section 125 plans, or flex plans.
Pre-tax health accounts and premium reimbursements are available because of Internal Revenue Code (IRC) section 125. Plans formed under section 125 are often called "cafeteria plans" because they allow employees to lower their taxable earnings to pay for pre-tax benefit offerings pre-selected by the employer.
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