Flexible Spending Accounts (FSA)
Valuable pre-tax benefits with innovative services!
A Flexible Spending Account (FSA) is an IRS Code Section 125 Cafeteria Plan. Through it, Participants set aside funds on a pre-tax basis each year into their FlexSystem account(s), and subsequently access those funds for qualifying healthcare and/or dependent care expenses incurred within the Plan Year.
Why offer an FSA?
Offering an FSA as part of an employee benefits program provides valuable benefits to both employers and their eligible employees.
- Reduces payroll taxes (Social Security and Medicare): for every dollar of employee contribution into the FSA Plan, employers save 7.65% FICA taxes.
- Saves on the cost of administration: the tax savings gained often covers the entire cost of Plan administration.
- Enhances the employee benefits package: helps attract and retain motivated employees.
- Boosts employee satisfaction.
- Saves on the cost of eligible healthcare and/or dependent care expenses: using pre-tax dollars spells out a savings of nearly thirty percent.
- Offers immediate access to elected healthcare FSA funds.
- Covers common types of expenses: medical, dental, ortho, vision, prescription drugs, day care, and more.Boosts employee satisfaction.
Health Savings Accounts (HSA)
Since 2003, these Plans have been the fastest growing employee benefit. Why the popularity? Simply put, HSAs make good sense. Besides helping employers reduce their health insurance costs, when HSAs are in place, employers add depth to their employee benefits and keep more money in their pockets. More and more employers are choosing this consumer-driven healthcare account to empower their employees.
Why Offer an HSA?
With HSAs, both employers and employees make payroll contributions to pay for future eligible medical expenses. Contributed funds are tax-free to employees and tax deductible for employers.
HSAs offer consumers triple tax savings!
1. Federal tax deductions on contributions
2. Tax-free growth on invested funds
3. Tax-free withdrawals for qualified medical expenses
For employers, an HSA creates tax savings! Hidden fees and risks associated with the reimbursement process are eliminated. Furthermore, through a High Deductible Plan, employers can reduce health insurance costs. With an HSA, employers have the ability to provide employees with more control over their healthcare.
Health Reimbursement Accounts (HRA)
Why offer an HRA?
By offering an HRA employers boost employee morale and save substantially when it comes to overall health benefits costs. For employees, HRAs provide real savings and more control. An HRA is the right choice for employers who want to allocate a set dollar amount for employee medical expenses or who wish to offer a Plan that covers specific medical expenses only.
Allows for a continuation of employee benefits:
- Maximizes employee healthcare benefits
- Appropriate for businesses of all size
- Provides control to employees by putting healthcare choices in their hands
- Boosts employee morale because employer contributions are apparent
- Allows unused dollars to be carried over from year to year (depending on Plan design)
With the HRA, employers contribute a specific annual amount (tax-deductible) from which employees pay for their healthcare expenses (tax-free). When a medical expense is incurred, the employee submits a request for reimbursement. A unique funding arrangement is available and allows advance claim payment to employees before full Plan funding has been received.
Looking for tax and accounting services too? Click here for more info!