Section II: BASE® 125 Cafeteria Plan

Quiz 3: Where do the savings come from?

1.While the FSA and DCAP plans are considered employer provided plans, the employee elects to make a pre-tax contribution for medical expenses or dependent care expenses that reduces the employer’s share of payroll taxes.

1. Answer: a. True

Even though this is considered an employer provided plan, the employee elects to make a pre-tax contribution for medical expenses or dependent care expenses that reduces the employer’s share of payroll taxes.

2.Employees may realize an increase in take-home pay by reducing the amount of taxable income when utilizing a BASE® 125 Cafeteria Plan.

2. Answer: a. True.

Employees may realize increased take-home pay by reducing the amount of taxable income and pre-tax salary reduction elections.

3.The amount of money that individuals can save by paying for health insurance through a BASE® 125 Cafeteria Plan can end up between:

3. Answer: b. 25-50%.

Depending on an employee’s family income, the amount of money that individuals can save by paying for health insurance this way is between 25-50% of their total insurance premium.

4.When an employer implements a BASE® 125 Plan they may:

4. Answer: b. Save under state unemployment insurance and workers’ compensation laws.

The BASE® 125 Cafeteria Plan provides various areas of savings for an employer, including the opportunity to save under state unemployment insurance and workers’ compensation laws.

5.The FSA, DCAP, and POP plans allow participating employees to benefit by paying with pre-tax dollars.

5. Answer: a. True

Since these funds are transferred from the employee’s wages on a pre-tax basis, employees save federal, state, Social Security and Medicare taxes.

Congratulations!

You have successfully completed the BASE® Certification program.

You will be receiving a certificate of completion that will be mailed to your Agency Manager’s office.

For further questions, please contact BASE® at 1-877-342-5105 or visit us on the web at www.BASEonline.com.

Thank you for taking this quiz.

Continue to Section III: Chapter 1!