Flexible Spending Accounts (FSAs)
A Flexible Spending Account is a cafeteria plan under Section 125 of the tax code. It is a tax-favored savings account and is funded solely by the employee through regular pre-tax payroll deductions. The funds from the account can be withdrawn tax-free to pay for eligible medical, dental, vision, prescription and dependent daycare expenses. Additionally, employees elect how much they want withdrawn from each pay period, which can be changed annually or upon a qualifying event such as marriage or divorce. For example, the average working employee in America spends more than $1,000 annually on these types of benefits. By participating in a FSA, an employee always has cash to pay for these expenses, and as an added benefit, their taxable income is reduced which also increases the percentage of pay they take home.
Health Reimbursement Accounts (HRAs)
An Health Reimbursement Account pairs a high deductible, low premium health insurance plan (HDHP) with a tax-favored savings account to cover the high deductible. The plan requires that the employer contribute to the savings account. The account can be used to reimburse employees for co-pays and other qualified expenses submitted by the employee, prior to the deductible being met.
Health Savings Accounts (HSAs)
An HSA combines a high deductible, lower premium group health insurance plan (HDHP) with an employee owned savings account. Both employer and employee can contribute, with pre-taxed dollars, to the savings account. The account is used directly by employee to help fund the deductible and other qualified medical expenses.
Premium Only Plans (POPs)
A Premium-Only Plan allows employees to select, purchase and pay monthly premiums for their own individual insurance plan with pre-tax dollars. Employees elect a set amount of wages to be deducted from each payroll to be used by the employer to reimburse the employee for the monthly premium.
