SIMPLE Cafeteria Plan Act of 2005

The SIMPLE Cafeteria Plan Act of 2005 (S. 723) was designed to make it easier for small businesses with 100 or fewer employees to offer tax-free benefit plans, such as health and dependent care assistance. The bill would allow self-employed individuals to participate in these plans and would add long-term care insurance as a qualified benefit.

For employees, the legislation would provide more flexibility by allowing them to carry over up to $500 in unused flexible spending account (FSA) funds to the next year or transfer those funds into a retirement account or Health Savings Account. Additionally, it would set specific limits on how much employer-contributed benefit income can be excluded from an employee's gross income for tax purposes, adjusting those limits annually for inflation.