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Agenda - 11-14-2006-7b
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Agenda - 11-14-2006-7b
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Last modified
9/2/2008 12:34:40 AM
Creation date
8/29/2008 9:52:46 AM
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BOCC
Date
11/14/2006
Document Type
Agenda
Agenda Item
7b
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Minutes - 20061114
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Path:
\Board of County Commissioners\Minutes - Approved\2000's\2006
Orange County Child Care Task Force - 11-14-2006, Item 7b
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\Board of County Commissioners\Historical Information\Historical Information
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8 <br />scholarship and/or funding models that would allow businesses to contribute to existing subsidy <br />programs for the benefit of their own employees or for the benefit of all, and building or <br />contributing to the building of on-site centers designed to serve the needs of the business's <br />employees. <br />BENEFIT MODELS <br />There are several benefit models that employers can utilize to pap or help employees pap for clvld <br />care expenses. Some, like the "cafeteria plans" are utilized more often by smaller businesses or as a <br />portion of the benefit package at a larger employer. Standard. benefit packages are more widely used <br />and are found at most larger businesses. <br />Internal Revenue Code Section 125 describes an arrangement by which an employer establishes a <br />plan so employees map choose to reduce pay before taxes (pre-tax contributions), thereby avoiding <br />tax on those dollars used to purchase benefits. The amount set aside is exempt from federal and state <br />income taxes and FICA (Social Security) and Medicare taxes for the employee, and it is exempt from <br />the Social Security and Medicare payroll tax match for the employer. <br />Benefits that may be included in a Section 125 Plan include medical, dental, vision, group-term life, <br />disability, and dependent care assistance. In Code Section 125, the IRS refers to these types of plans <br />as "cafeteria plans." The term "cafeteria plan" is used by the IlZS to describe any arrangement in <br />which a participant leas a choice between cash (taxable) and benefits (pre-tax). <br />The most common types of Section 125 Plans are explained below: <br />Insurance Premium Conversion: for payment by the employee of a portion of the cost for qualified <br />insurance benefits, such as health, disability, or dental. <br />Flex Plan or Flexible Benefit Plan: Premium Conversion with Reimbursement Accounts (Medical, <br />Dependent Care, Adoption Assistance). <br />Full-Flex Plan or Cafeteria Plan: a wide choice of benefits, usually with employer credits that the <br />employee may allocate towaxd the cost of one or more benefits (including cash). <br />In addition to these "cafeteria" style plans, employers map opt to provide child case costs as a direct <br />benefit in a standard plan, similar to health, dental and life insurance plans offered by many large <br />employers. In these cases, employees without children would get none of the benefit, much like an <br />employee who does not use the employer health plan. <br />SCHOLARSHIP AND. OTHER FUNDING MODELS <br />For businesses that are not able to adjust their benefit plans, scholaxsliip and other funding models <br />are another option for assisting employees with child care needs. <br />VoucherModel.• Employers contract with child care providers or child care centers in the community <br />for services for their employees. Parents are given vouchers for all or part of their child care costs <br />and the child care programs redeem the vouchers for payment through the employer. <br />KeimburrementModel.• Employees choose the child care arrangement best suited to their needs (child <br />care center, family clvld care home, after-school program) and then receive a reimbursement from <br />the company for some portion of the costs. <br />6 <br />
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