Cafeteria Plan / 401K

[watercolor]

Just looking for information on some things. Can someone explain to me what the Cafeteria Plan means in regards to health care?

Also- I need to get some learning on 401k's and such. Basically anything helpful for a first timer on the 401 stuff.

 

[MMDad]

Just looking for information on some things. Can someone explain to me what the Cafeteria Plan means in regards to health care?

Also- I need to get some learning on 401k's and such. Basically anything helpful for a first timer on the 401 stuff.

Cafeteria just means you have lots of choices. If you need medical and dental coverage but not vision, you can elect those coverages. You can usually select between HMO or traditional healthcare.

 

[CableChick]

Just looking for information on some things. Can someone explain to me what the Cafeteria Plan means in regards to health care?

Also- I need to get some learning on 401k's and such. Basically anything helpful for a first timer on the 401 stuff.

I'm not familiar with Cafeteria Plans. http://www.bankrate.com/brm/news/insurance/flex-account1.asp


401Ks ... put in as much as you can. Max the % especially if your employer is matching the contribution! It's $$$ in your pocket! I put in 6% and my company matches the 6%. Check your vested time period. It may be that all the matching contributions are yours from the get-go, but it may be several months or years.

 

[Chasey_Lane]

Just looking for information on some things. Can someone explain to me what the Cafeteria Plan means in regards to health care?

Also- I need to get some learning on 401k's and such. Basically anything helpful for a first timer on the 401 stuff.

A cafeteria plan is just a sub of a health plan. Your basic health insurance policy covers check ups, sickness, infections, broken bones, etc. A cafeteria plan will pick up expenses not typically covered under a health insurance plan such as contact lens solution. A dependent cafeteria plan is a tax deferred plan that allows you to pay for daycare/dependent care costs on a pre-tax basis saving $$ in the long run.

A 401K is a "retirement" plan. You're essentially saving for your future.

 

[morganj614]

Just looking for information on some things. Can someone explain to me what the Cafeteria Plan means in regards to health care?

Also- I need to get some learning on 401k's and such. Basically anything helpful for a first timer on the 401 stuff.

If you know ahead of time that you need a crown for your tooth or have to pay out of pocket for prescriptions, a cafeteria plan lets you subtract that amount pre-tax.
One year I needed a crown for $400 and I had it taken out of my pay in even installments and pre-tax.
But say you tell them to withold $600 and only use $450 of it, you lose the other $150.

 

[Chasey_Lane]

If you know ahead of time that you need a crown for your tooth or have to pay out of pocket for prescriptions, a cafeteria plan lets you subtract that amount pre-tax.
One year I needed a crown for $400 and I had it taken out of my pay in even installments and pre-tax.
But say you tell them to withold $600 and only use $450 of it, you lose the other $150.

I hear of lots of parents using this method to pay for braces, too.

And yep, most cafeteria plans are use or lose, unless you get an employee sponsored plan in which you can take it with you.

 

[kwillia]

I hear of lots of parents using this method to pay for braces, too.

And yep, most cafeteria plans are use or lose, unless you get an employee sponsored plan in which you can take it with you.

When both kids were in daycare, I always withheld the max of $5,000. When 1 kid was in, I calculated the expected max for that kid and withheld that amount... it was very near the max even for 1 kid.

I knew my son would be getting braces this year so did $3,000 for medical. Last year I withheld $1000 for medical, but found it was a royal PITA collecting all the receipts from meds ,co-pays, eye glasses, etc. in order to be able to reclaim the money. It is no pain at all for those who are good at keeping track of receipts.

I always held on to receipts and didn't make a claim until mid year and then again at year end. I treat it as a "forced savings" and use the mid year cash in to pay for vacations and the year end cash in to get the rest of the money from my account to use to pay for Christmas.

Using the cafeteria plan does wonders for reducing your tax base...