Premium Only Plan
for Flexible Spending plans, click here

What Is A Cafeteria Plan?
The Internal Revenue Service allows employees to pay some benefit premiums with before tax dollars. It is entirely your choice which benefits you will include on the Cafeteria Plan. In fact, that's where the name cafeteria comes from -- you pick and choose the benefit premiums you want to include. All health benefit plans offered in the District, dental plan, and the cancer/catastrophic illness plan are available for payment through the Cafeteria Plan.

For many employees this becomes a wonderful benefit because it can allow your gross salary to be reduced, which in turn lowers the amount of federal income tax you pay each pay period! You see an immediate tax savings.

Is This Legal?
Absolutely! It is allowed under Section 125 of the tax code. Anyone with doubts or questions can contact the local IRS Office directly for full details.

Will I Have To Pay Taxes On These Benefits Later?
No. The benefit costs are deducted from your salary before taxes, decreasing the amount of salary subject to tax. At the end of the year, the salary that is reported to the IRS and subject to tax is the lower, after benefits amount.

What Does It Cost To Be On The Cafeteria Plan?
It costs you nothing. This is a service provided by North East ISD.

How Much Will I Save Each Month By Being On The Cafeteria Plan?
It is impossible to predict what everyone will save each month because savings will vary according to which benefits are placed on the Cafeteria Plan and individual salaries and rates of tax. Anyone needing help in calculating their savings should contact their personal accountant.

This Seems Like A Great Benefit. Why Would Anyone Choose Not To Participate?
When you decide to pay premiums through the Cafeteria Plan, your selections are irrevocable for the benefit year unless there is a change in family status as outlined in the Internal Revenue Code, Section 125, and related regulations.

These changes include:

• a divorce, legal separation or marriage
• the death of a child or spouse
• the birth of a child
• the legal adoption of a child
• change in custody of a child
• FMLA leave of absence
  
• Open Enrollment
• change or loss of employement by employee, spouse or dependent
• reduction in work hours, or
• ineligibility of a dependent child.

Unless you experience one of these changes in family status, or another change described in Section 4.7 of the District´s Cafeteria Plan, you may not drop your coverage for that benefit year. Specific IRS requirements apply even within the listed categories. Risk Management must be notified in writing within thirty one (31) days of any applicable status change in order to make election changes.

Is My Teacher Retirement System Deduction Affected?
No. The TRS contribution will remain at the 7.05% of your monthly or biweekly gross salary.

Remember:
Premiums paid through the Cafeteria Plan cannot be claimed as a deduction on your income tax return at the end of the year.

New Enrollment (new employees only)
If you wish to enroll in the Cafeteria Plan for the first time, complete an Election and Compensation Reduction Agreement form. Check off those benefit premiums you want to include in the Cafeteria Plan, indicate that you elect to participate in the plan, sign, date and return the form to your campus/department representative or the Employee Benefits. New employees have 31 calendar days from the date of employment to enroll in the Cafeteria Plan.

Cancel Participation
If you wish to cancel all of your benefit premiums from the Cafeteria Plan, you must complete an Election and Compensation Reduction Agreement form indicating that you elect not to participate in the NEISD Cafeteria Plan. This can only be done during each Open Enrollment period, unless you experience a family status change listed above.

Change Election Choices (new employees only)
If you are canceling some premiums but retaining others, you will need to complete the Election and Compensation Reduction Agreement form, indicate that you are electing to participate in the NEISD Cafeteria Plan, mark those benefit premiums you wish to retain on the Cafeteria Plan.

Where Do I Get The Election Forms? (new employees only)
Simply click on Election and Compenstation Reduction Agreement, or you may contact the Employee Benefits Office.

How Does the Plan Work?
A. Employee on a Monthly Payroll: This employee has a monthly gross income of $3,225.00, filed a W-4 as married with one (1) allowance, has a $287.00 deduction for health coverage, and a $69.00 deduction for dental coverage. By placing the premiums on the Cafeteria Plan, this employee will increase his/her monthly take-home pay by $57.81. Savings will vary for each employee.

Calculation WITH Cafeteria Plan

 

Calculation WITHOUT Cafeteria Plan

B. Emplopyee on a Bi-Weekly Payroll: This employee has a bi-weekly gross income of $1,100.00, filed a W-4 as married with one (1) allowance, has a $153.50 deduction for health coverage(one-half of monthly amount), and a $69.00 deduction for dental coverage. By placing the premiums on the Cafeteria Plan, this employee will increase his/her bi-weekly take-home pay by $25.48.

Calculation WITH Cafeteria Plan

 

Calculation WITHOUT Cafeteria Plan