Flexible Spending Accounts
Pre-tax plans come in a variety of options that are available through specific sections of the IRS code.
These plans save money on Federal, FICA, and State taxes for both the employers and employees.
THE AVAILABLE PRE-TAX BENEFIT PLANS INCLUDE:
- Flexible Spending Accounts (FSAs)
- Commuter Transit/Parking Plans
- Education Reimbursement Accounts
- Premium Only Plans
- Simple Cafeteria Plans
- Health Reimbursement Arrangements (HRAs)
- Health Savings Accounts (HSAs)
STANDARD Pre-Tax Plan Services
OPTIONAL Pre-Tax Plan Services
Flexible Spending Accounts (FSAs)
Many employers choose to expand their Section 125 flexible benefit plan by incorporating an FSA, allowing employees to set aside pre-tax dollars to be used for eligible expenses. Contributions to the benefit account help offset taxable income, resulting in savings for employers and employees. When implementing an FSA, employers save an average of 10 percent on related expenses.
There are a variety of FSA programs to suit your employees’ needs. The types of FSAs that can be offered to participants include a Healthcare FSA, Dependent Care FSA, Limited FSA, and Adoption Assistance Account.
This is a pre-tax benefit account that can be used to pay for eligible medical, dental, and vision care expenses that are not covered by health insurance plans. Some of the reimbursable expenses under this type of FSA include:
- Dental Fees
- Orthodontic Treatments
- Diabetic Supplies
- Eye Exams
- Eligible Over-the-Counter Medications
- Physician Copays
This type of account can only reimburse participants for eligible dental and vision care expenses such as dentures, eye glasses, lasik eye surgery and more. A Limited FSA is available for HSA participants.
This is a pre-tax benefit account that can be used to pay for eligible dependent care services. This account is a smart, simple way to save money while taking care of your loved ones. Some of the reimbursable expenses under this type of FSA include:
- Before and After School Care
- Daycare for Disabled or Elderly Dependents
- Licensed Day Care Centers
- Private Preschool
- Qualified Babysitters or Nannies
- Summer Day Camp
These accounts are designed to help adoptive parents meet costly needs. Reasonable and necessary adoption fees, court costs, and other expenses can be reimbursed under an FSA program.
Commuter Transit / Parking Plans
Commuter plans were first established in 2000. Since then, our operations have expanded to include hundreds of clients from coast to coast.
This account is an employer-sponsored benefit program that allows participants to set aside pre-tax dollars to pay for eligible work-related commuter expenses determined by IRS Section 132(f).
BENEFITS WE ADMINISTER
Commuter Transit Plans
- Commuter Highway Vehicles
- Public Transportation
- Eligible Parking Expenses
- Monthly Parking Contracts
By offering Commuter Transit/Parking plans, employers are able to attract and recruit employees while also obtaining savings on FICA taxes. On average, employees save 30 percent and employers save 7.65 percent on related expenses.
Education Reimbursement Accounts
One of the most generous benefits a company can offer is an Education Reimbursement Account. This benefit program is a contractual agreement between employer and employee that outlines specific terms under which the employer may pay for the employee’s continued education.
This benefit program varies greatly from company to company. Those who choose to participate in this program pay out-of-pocket for the courses they enroll in. When the course is over, the employee may be reimbursed in part or in full for tuition expenses, depending on the plan design. Conditions may apply.
Premium Only Plans
Premium Only Plans (POPs) are the building blocks of the Section 125 plan. These plans allow employees to pay their health insurance premiums with tax-free dollars and save up to 40 percent on federal income taxes alone.
This is a great solution for companies who want to offer tax benefits to eligible employees but who do not want to invest into a full pre-tax benefit plan.
Examples of premiums that can be deducted from employees’ paychecks on a pre-tax basis include, but are not limited to, health insurance, dental insurance, vision insurance, disability insurance, cancer insurance and many more.
Simple Cafeteria Plans
Under the Healthcare Reform Act, eligible small employers are now able to establish a new type of cafeteria plan known as the Simple Cafeteria Plan. Compliance with cafeteria plan nondiscrimination rules have been problematic for many small employers and as a result, this new plan can now make cafeteria plans a more practical option. Simple Cafeteria Plans eliminate problems by providing safe-harbor plan designs that ensure compliance with non-discrimination rules.
TO IMPLEMENT A SIMPLE CAFETERIA PLAN, FOUR BASIC REQUIREMENTS MUST BE SATISFIED:
A small employer is defined as an average of 100 or less employees during either of the two preceding years.
All non-excludible employees with at least 1,000 hours of service during the preceding year are eligible to participate.
Each eligible employee must be able to elect any qualified benefit available under the plan.
In addition to salary reduction contributions, each employee who is not a key employee or highly compensated employee must receive a uniform employer contribution. This amount is at least:
- two percent of the employee’s annual compensation;
- six percent of the employee’s compensation for the plan year; or twice the amount of the employee’s salary reduction.