Long-term care insurance provides benefits that may cover the basic needs or activities of daily living while providing a choice of remaining in your own home or having a say in where you will receive care. This kind of coverage can help protect your assets from being depleted and allow you to avoid putting both financial and caregiver pressure on family members.
A life income plan is a financial product that ensures a lifetime guaranteed income for retired participants. Similar to a charitable remainder trust, life income plans are funded by a pool of investments.
A Section 125 plan is part of the IRS code that enables and allows employees to take taxable benefits, such as a cash salary, and convert them into nontaxable benefits. These benefits can be deducted from an employee’s paycheck before taxes are paid. Cafeteria plans are particularly good for participants who have regular expenses that are related to medical issues and child care.
Employees who are enrolled in a Section 125 plan can set aside insurance premiums and other funds pretax, which can then go toward certain qualified medical and childcare expenses. Depending on where they live, participating employees can save from 20% to 40% in combined federal, state, and local taxes on a variety of items that they typically already purchase with out-of-pocket post-tax funds. Employers can save an additional 7.65% on their share of payroll taxes.
Section 125 plans must be created by an employer. The benefits are available to employees, their spouses, and their dependents when a plan is created. Depending on the circumstances and details of the plan, Section 125 benefits may also extend to former employees but the plan cannot exist primarily for them.
