Group Life & AnnuitiesQuestion 689 of 716
A Section 125 cafeteria plan allows employees to:
a.Choose only cash compensation
b.Choose among qualified benefits, paying for some of them with pre-tax dollars
c.Avoid all taxes on their wages
d.Purchase only employer-sponsored group life insurance, paying those premiums entirely with after-tax dollars
Explanation
A Section 125 plan lets employees select from a menu of qualified benefits and fund chosen ones with pre-tax dollars, lowering taxable income. It is not cash-only, tax-free wages, or life-insurance-only.
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Related questions on this topic
- Federal COBRA generally lets an eligible employee who loses group health coverage continue it for a limited time by:
- Which is a COBRA qualifying event that can extend continuation up to 36 months for dependents?
- COBRA generally applies to employers with:
- A Flexible Spending Account (FSA) under a cafeteria plan traditionally follows a rule that:
- The 'actively-at-work' provision in group insurance requires that, for coverage to take effect, the employee must:
- Group short-term disability (STD) differs from long-term disability (LTD) mainly in that STD:
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)