Health Care Plans

Helping Employees Pay Their Portion of Medical Expenses


Section 125 Plans

IThis plan enable employees to set aside pre-tax income for any qualified dental, dependent-care or medical expenses. A special type of account under Internal Revenue Code section 129 is the Dependent Care Assistance Plan . This can be offered to employees who would like to set aside pretax income soley for dependent care expenses. ............ The two types of section 125 plans available to Employers include

(a) a premium- only plan also known as (POP) which enables employees to pay theirr share of health care insurance premiums using pretax dollars.

(b) A flexible spending account known as (FSA) which can be used to pay out of pocket expenses for qualified dependent and health care , To contribute to a FSA Account , employees establish an annual contribution amount which can be deducted from their paycheck through the year. Although it has a draw back in that if you do not use it you may lose it. i.e any money not spent during the year it was set aside , or during a grace period the following year, must be forfeited back to the plan.

Section 125 plans is a simple and effective way for Employers to add employee benefits. As we know benefit packages help attract and retain the talent employers need for their businesses.

Health Reimbursement Arrangements

This type of account is fully funded by the employer who also sets the ground rules. Many employees use this o pay for qualifed medical expenses such as co pays and deductibles. This plan has a great advantage over Flexible Spending Account (FSA) because it is not subject to the use it-or-lose-it rules.

Since it is not counted in the employee income it is tax free , for the employer he of she does not make payments unless the employee incur medical expenses. Balnces can be rolled over to the next year.

Health Savings Account

A health savings account (HSA) is a tax- advantaged trust or custodial account for individuals who have a qualified, high-deductible health plan(HDHP). Participants can help reduce healh insurance costs by using an HSA in conjunction with an High Deductible Health Plan, which typically has a lower cost premiums in exchange for a higher deductible on health-care expenses. People who open HSAs can pay for qualified out-of-pocket health-care expenses with tax-free dollars from this account, which can grow through investment earnings. In this way, such accounts are like an individual retirement arrangement (IRA) or a 529 plan for educational expenses. Employees like this account as it helps them save.