Both Employers and Employees Benefit from a Section 125 Plan. Employees avoid paying any tax (FICA or income) on premiums and deductions through a Section 125 Plan. Employers that offer a Section 125 Plan benefit by eliminating the 7.65% matching FICA taxes on every dollar deducted from employee wages through a Section 125 Plan. To calculate your estimated savings, click here.
Employee Contribution Plans:
Premium Only Plan, generally referred to as a POP Plan is a written plan document that allows employers to deduct premium contributions from employees on a pre-tax basis through salary reduction. Premiums may be for health insurance, dental insurance, vision insurance, accident insurance, and cancer insurance, etc. In addition, employee contributions to a Health Savings Account may also be included in your POP Plan.
Premium Only Plan with HSA, all of the benefits of a POP Plan with the added ability to deduction contributions to a Health Savings Plan on a pre-tax basis through salary reduction.
Health FSA Plan is a written plan document that allows employers to deduct premium contributions as a POP Plan does, but also allows employers to deduct out-of-pocket medical expenses on a pre-tax basis through salary reduction.
Limited-Purpose Health FSA Plan is a written plan document that allows employers to deduct premium contributions as a POP Plan does, but also allows employers to deduct out-of-pocket dental and vision expenses, as well as medical expenses that exceed the employees deductible on a pre-tax basis through salary reduction. A Limited-Purpose Health FSA Plan is used when the employer also offers a Health Savings Account (HSA).
Dependent Care FSA Plan is a written plan document that allows employers to deduct premium contributions as POP Plan does, but also allows employers to deduct out-of-pocket dependent care expenses on a pre-tax basis through salary reduction.
Individual Insurance Premium FSA Plan is a written plan document that allows employers to deduct individual insurance premiums on a pre-tax basis through salary reduction. The individual insurance premiums are for insurance that is generally billed to the employee directly and not part of a group plan.
Employer Contribution Plans:
Health Reimbursement Arrangements, generally referred to as HRA’s, are defined contribution plans that are owned and controlled by employers for the benefit of employees. The are 100% funded by employers. HRA’s offer many plan design options that allow employers to meet their benefit goals.
Health Savings Accounts
What is a Health Savings Account?
A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan (HDHP). Employers and employees can contribute to an HSA tax free, earnings on investments within the HSA are tax free and withdrawals from the account to pay for eligible expenses are tax free. Each year unused funds aremaining in the account gain interest or earnings tax free and continue to be available for future use. Once an individual reaches age 65, distributions can be for any reason – they are not limited to eligible expenses.
What are the current HSA Limits?
How Can FlexChecks Assist with your HSA?
FlexChecks can assist with your Health Savings Account in three ways:
1. FlexChecks can create or modify your Section 125 plan documents to include an HSA component. This allows employee contributions to be deducted from pay on a pre-tax basis saving employees from 22-40% on every dollar contributed to the plan, AND employers save 7.65% on employee contributions by reducing the FICA tax matching.
2. FlexChecks has partnered with HSA Bank to offer administration of your employee deposits to their account. HSA Bank provides banking convenience to employees while FlexChecks provides management of the funds by providing:
- Online participant portal to manage all flex plans in one convenient place, including Health FSA, Dependent Care FSA, and HSA.
- Account balance management and notifications
- Moblie application
- Multi-purpose debit cards
3. FlexChecks can manage reporting of employee and employer HSA contributions on your employee W-2’s as required by the IRS.