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Note: Only "Employees" can participate in a Cafeteria Plan and/or Health Reimbursement Arrangement (HRA) on a tax-favored basis. Thus, while partnerships, sole proprietorships and Sub-Chapter "S" corporations may sponsor Cafeteria Plans, the following cannot participate on a tax-favored basis: sole proprietors, partners, and greater than 2% shareholders in Sub-Chapter "S" corporations, as well as direct family members (spouses, siblings, parents, and children) of the greater than 2% owner. Please consult with your CPA for confirmation or further guidance, as O.C.A. Benefit Services does not render tax or legal advice.

Regardless of the Line of Service, each Employer is given a customized documentation package that O.C.A. Benefit Services will provide during the implementation process. It is the sole responsibility of the Employer, as the legal Plan Administrator, to notify O.C.A. Benefit Services using the appropriate Employee Add/Term/Change forms within 60 days of a "life event" change. (Those Employers using O.C.A. to administer COBRA services, will have the ability to make these changes online using our web portal.)

Remember, it is the Employer's responsibility to notify their payroll department or payroll vendor regarding the implementation of their Section 125 Cafeteria Plan prior to the plan effective date. The payroll department or payroll vendor will create the necessary field codes to accommodate the newly created pre-tax deductions.

O.C.A. Benefit Services would like to remind our clients that is it solely the Employer's responsibility to distribute the Summary Plan Description to ALL of its' participants.

HRAs & COBRA: An Employer is entitled to bill COBRA participants 1/12th of the HRA maximum benefit (plus 2% administrative surcharge) unless rollover option is selected. With a rollover option an actuary MUST be retained to determine COBRA premium for the HRA. The HRA is not available to participants selecting coverage under the NJ Dependent to Age 31 or NJ State Continuation program. Any unused COBRA contributions that are paid to the employer remain the employer's property at the conclusion of the Plan year run-out period. Conversely, Employers are responsible for funding the full amount a COBRA participant may claim through the HRA, even in cases when they haven't fully contributed their portion. Offering the HRA in conjunction with COBRA benefits is NOT an option. An organization subject to COBRA is legally bound to offer the HRA.

To avoid unnecessary banking fees, we strongly suggest any accounts used or set-up for the operations of any tax-favored plan be in a non-interest bearing general operating bank account.