PRE-TAX BENEFIT PLANS
Premium Conversion Plan
Known by a variety of names (cafeteria plan, Section 125 plan, etc.), a premium conversion plan allows your employees to pay their portion of premiums for certain employer-sponsored benefits (e.g., health, dental, vison, life and disability coverages) with pre-tax dollars. While your employees lower the impact these costs have on their take home pay by contributing pre-tax, you, the employer, save money on the matching FICA and Medicare taxes. With these FICA and Medicare savings, you will find that typically this benefit more than pays for itself.
Flexible Spending Accounts
Flexible Spending Accounts allow your employees to be reimbursed for their out-of-pocket medical and dependent care expenses using pre-tax dollars set aside through payroll reduction. By setting aside pre-tax dollars for these expenses, your employees lower their taxable income and increase their spending power. Employers save money on the matching FICA and Medicare taxes.
There are two types of Flexible Spending Accounts (FSA) available, i.e., Medical and Dependent Care. The Medical FSA helps your employees pay for medical expenses not covered or only partially covered by their health, dental and vision insurance. You, the employer, determine the maximum annual amount that your employees may contribute. The Dependent Care FSA helps your employees pay for child and elder care expenses they incur while they are at work. Currently, the maximum an employee can contribute for Dependent Care is $5000.
Health Reimbursement Account
A Health Reimbursement Account (HRA) is a employer-funded account which may be offered in conjunction with a High Deductible Health Plan (HDHP) or as a stand-alone plan. This account allows you, the employer, to reimburse your employees or former employees (including retirees) for out-of-pocket medical expenses, including insurance premiums. Employers set the annual amount that is available to employees for reimbursements. There is flexibility in the plan design of HRAs, allowing employers to tailor a plan to meet their specific needs.
Health Savings Account
A Health Savings Account (HSA) is a tax advantaged way for employees to pay for out-of-pocket medical expenses. An HSA permits employees who are actively enrolled in a qualified High Deductible Health Plan (HDHP) to deposit money tax-free into an HSA. As the employer, you may also contribute to the employees’ accounts. For 2012, the total that can be contributed to a HSA is $3,100 for an employee with single coverage, and $6,250 for an employee with family coverage. Employees can then make tax-free withdrawals from the HSA account to pay for qualified medical expenses.
Transportation Plan
A Transportation Plan is a tax advantaged way for employees to pay for the unreimbursed parking and mass-transit expenses they incur commuting to work. Currently employees can contribute pre-tax up to $240 a month for parking expenses and $125 a month to cover transit and van pooling expenses. You as the employer may also set up an employer- funded account to help offset the expenses of those employees who bicycle to work. Currently the maximum allowable bicycle benefit is $20 per month.
Compliance Services
HFS Benefits recognizes the importance of keeping your Premium Conversion Plan, Flexible Spending Accounts, HRAs and all your other benefits in compliance with all applicable rules and regulations so that you avoid penalties and you and your employees can continue to benefit from these plans.
Our Compliance services include plan document preparation, plan nondiscrimination testing and Form 5500 return preparation.
HFS Benefits has the experts on hand to guide you through the design, installation and administration of your benefit plan. Please call HFS Benefits or fill out a Request for Information form to receive additional information.