NAIFA Treasurer Matt Tassey is set to testify March 16 before the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access at a hearing titled, “Cafeteria Plans: A Menu of Non-Options for Small Business Owners.”
Cafeteria plans allow eligible workers to contribute a limited portion of their pre-tax compensation to designated accounts to support a variety of qualified benefits, which may include:
- Accident and health benefits (but not Archer medical savings accounts or long-term care insurance)
- Adoption assistance
- Dependent care assistance
- Group-term life insurance coverage
- Health savings accounts, including distributions to pay long-term care services
NAIFA has long supported cafeteria plans as a means for businesses to offer qualified benefits to their employees and has suggested a number of ways Congress can improve these plans. Specifically, NAIFA believes cafeteria plan rules should be changed to allow participation by owners of pass-through businesses, such as Subchapter S corporations, partnerships, LLCs, and sole proprietorships. Current law prevents these employers from offering cafeteria plans. NAIFA also believes long-term-care insurance should be added as a permitted benefit under cafeteria plans.
“Cafeteria plans allow employers to offer flexible benefits to their workers, at a reasonable cost to both the workers and the employers,” Tassey said in his written remarks to the subcommittee
. “The flexibility of being able to let workers choose benefits best suited to their unique circumstances is often the most important reason for an employer to establish and maintain this type of benefits plan.”
Tassey added: “It is unfair to pass-through business owners to exclude them from eligibility to participate in cafeteria plans. And, it may discourage these owners from offering—and paying for—cafeteria plan benefits to those who work for them.
“Long-term care insurance is more like health insurance than like deferred compensation. It is a security product that should be permitted as a cafeteria plan option.”
The hearing will be broadcast online
Photos added March 17: