HR Knowledge administers FSA, HRA and HSA benefits.
What are Flexible Spending Accounts (FSAs)?
An FSA is an account that an employee sets up that is similar to a savings account. With an FSA, an employee is able to deduct money from his/her payroll on a pretax basis and directly deposit these funds into a spending account. An employee can later withdraw these funds on a tax-free basis to pay for eligible medical, dental, vision, over-the-counter, prescription, and dependent care expenses for him/herself, a spouse, and eligible dependent children. FSAs are a great way to save taxes and reduce your out-of-pocket expenses!
What are eligible expenses?
Eligible health care expenses include, but are not limited to: Deductibles, Prescriptions, Dental Expenses, Vision Expenses, Chiropractic Expenses, Coinsurance Amounts, Hearing Expenses, Birth Control, Mental Health Counseling, and Acupuncture.
Eligible daycare expenses include, but are not limited to: Daycare Expenses, Day Camp, Pre-School, Babysitting (with restrictions), and After-School Programs.
Are there legal requirements to having an FSA?
Yes, a company must follow the regulations set forth by the federal government in order to establish and maintain a Section 125 POP (Premium Only Plan). These requirements include:
- Legal Documents
- Corporate Resolution
- 5500 Tax Filing
- Summary Plan Descriptions (SPDs)
- Employee Enrollment
- Discrimination Testing
How much will the company save?
You can calculate the savings to the company by applying the same principles used for POPs. Just add-up all the annual elections for these accounts and multiply by the FICA savings (7.65%).
To learn more about FSA plans, contact us.
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What is a Health Reimbursement Arrangement (HRA)?
An HRA is an employee benefit that employers establish and fund to cover certain out-of-pocket, co-pay, co-insurance, and/or deductible expenses to help employees reduce the cost of medical expenses for themselves, their spouse, and dependent children.
Why would a company consider an HRA?
Companies consider implementing HRAs as a way to reduce the cost of health insurance premiums. By increasing the deductible of the health insurance plan, the premium to purchase the coverage can be reduced considerably.
How does the deductible get paid?
There are several ways an employee can be reimbursed from the HRA depending on the options an employer allows. Here are examples of how to be reimbursed:
- An employee can submit a claim online, mail it, fax it, or drop the claim off to us along with the proper documentation necessary to prove they have incurred the expense. Proper documentation may consist of a letter that they will receive from the health insurance company. This letter is called a letter of explanation of benefits (EOB). In some cases, a receipt from the pharmacy may be all they need to submit. The employer will outline the proper documentation.
- An employer may authorize claims submission with a VISA Card. If an employer authorizes this form of reimbursement, an employee will receive a VISA Card after they are enrolled. To use the VISA Card, an employee simply presents it at an eligible location for an eligible expense. They may only use this card for eligible expenses and they must keep receipts, since they may be contacted to verify the expense.
To learn more about HRA plans, contact us.
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What is a Health Savings Account (HSA)?
An HSA combines high deductible health insurance with a tax-favored savings account. An HSA paired with an eligible high-deductible health plan helps individuals and families plan, save, and pay for health care.
HSAs offer triple tax savings:
- The money is tax-deductible, up to a legal limit.
- Savings grow tax free.
- Any money taken out to pay for qualified medical expenses is income-tax free.
An HSA is like no other savings vehicle available to taxpayers. With an HSA, the employee can decide:
- How much to contribute to the account
- When to use the savings to pay for or reimburse him/herself for qualified medical expenses
- What bank will administer the account
- Whether or not to invest some of the savings in mutual funds for greater potential long-term growth
To learn more about HSA plans and how we can administer them for you, contact us.