Enhancing Employers’ Benefits Packages, With Little or No Cost Increase
Employers can reduce their out-of-pocket costs while enhancing their benefit package - something that can attract top talent.
Boise, ID, October 04, 2005 --(PR.com)-- With the cost of healthcare premiums soaring, employers are wise to do all they can to reduce their cost while continuing to offer a quality benefits package. Doing so not only helps the employer’s bottom line, but also helps to attract new talent. New hire prospects typically evaluate the benefit package when considering whether or not to accept a new position. In order to attract top talent, employers should enhance their benefits offering as much as possible.
One way that employers can enhance their benefits package is by implementing a Section 125 or Cafeteria plan. No, this is not an arrangement designed to let you choose various foods. Rather, the name derives from the fact that one can choose from a “menu” of benefit items that are most beneficial for them. The premiums for the benefits are deducted from their pay before taxes are calculated. This in turn reduces the tax liability for employers and employees alike, thereby increasing the amount of “take home” pay.
FLEXIBLE SPENDING PLANS
Flexible benefit plans can include health, dental, vision and life insurance, as well as medical reimbursement and dependent care. Additionally, Medical Reimbursement and Dependent Care Plans are types of flexible benefits. Medical Reimbursement plans (MRP) allow employees to pay out-of-pocket medical expenses with pre-tax dollars. When employees elect to have a Dependent Care plan, they can pay for expenses (using pre-tax dollars) incurred for the care of children or any disabled dependent so the employee and spouse can work.
HEALTH REIMBURSEMENT ACCOUNTS
Health Reimbursement Accounts (HRA) are plans where employers contribute funds to reimburse employees for health expenses. Funds reimbursed from HRAs are not taxable.
HRAs began as a way for employers to control medical expenses. An employer would offer high deductible insurance plans to employees and use the premium savings toward a contribution to a Health Reimbursement Account. The employees could then use the account to pay medical expenses such as co-pays, deductibles, dental expenses, vision expenses, etc. An added bonus is that the funds can be carried over from year to year.
HOW FLEXIBLE ARE HRAS?
Although the plans must follow IRS Code Sections 105, 105(H), and 106, employers are allowed flexibility in how the plans are designed. For example, an employer could limit the types of expenses employees may be reimbursed. Employers may tie the HRA to a medical insurance choice, or employers may use the HRA in place of a dental or vision plan. Employees may contribute funds to the HRA, but the funds would need to be deducted from pay AFTER tax and a trust would need to be established. Therefore, all funds contributed to the plan should be from the employer only.
DIFFERENCES BETWEEN AN HRA AND A MRP
There are a lot of similarities, especially since both plans are to reimburse the employee for expenses. However, it is important to remember that the HRA is funded by the employer, while the Medical Reimbursement Plan is employee-funded. Another major difference is that the HRA, if set up to do so, can have its unused funds rolled over from year-to-year, while an MRP cannot.
CONSUMER DRIVEN HEALTH CARE PAVES WAY FOR BENNY™ CARD
Demand for reduced health care premiums and direct control over accounts has led to an innovation called the Benny™ Card. With the ability to provide a real-time interface to consumers, the Benny™ Card provides the versatility and control consumers are looking for. Up to five accounts can be controlled by one card, and transfers are made automatically between pre-tax flex and health reimbursement dollars or spending accounts and to the medical or dependent care provider.
INCREASED TAX SAVINGS & REDUCED OUT-OF-POCKET EXPENSES
Companies are choosing Benny™ Card because of the increased tax savings. When newly introduced to a company, the Benny™ Card boasts increased employee participation rates of up to 40%, thereby creating tax savings for employers and employees. Because payment is automatically transferred to the provider when the card is used, there are no transmission or credit card fees to contend with. Each time the card is used, the member’s card balance is automatically reduced.
COMPREHENSIVE EMPLOYER SOLUTIONS
To save more time and money, many employers look to full-service agencies to handle their payroll, flexible benefits, and recruitment needs. PayrollAmerica is a leading full service payroll bureau offering state-of-the-art payroll, flex-benefit, and recruitment solutions. To learn more about the Benny™ Card and PayrollAmerica’s other product offerings including flexible spending plans visit their website at www.payrollamerica.com or call (800) 375-8997.
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One way that employers can enhance their benefits package is by implementing a Section 125 or Cafeteria plan. No, this is not an arrangement designed to let you choose various foods. Rather, the name derives from the fact that one can choose from a “menu” of benefit items that are most beneficial for them. The premiums for the benefits are deducted from their pay before taxes are calculated. This in turn reduces the tax liability for employers and employees alike, thereby increasing the amount of “take home” pay.
FLEXIBLE SPENDING PLANS
Flexible benefit plans can include health, dental, vision and life insurance, as well as medical reimbursement and dependent care. Additionally, Medical Reimbursement and Dependent Care Plans are types of flexible benefits. Medical Reimbursement plans (MRP) allow employees to pay out-of-pocket medical expenses with pre-tax dollars. When employees elect to have a Dependent Care plan, they can pay for expenses (using pre-tax dollars) incurred for the care of children or any disabled dependent so the employee and spouse can work.
HEALTH REIMBURSEMENT ACCOUNTS
Health Reimbursement Accounts (HRA) are plans where employers contribute funds to reimburse employees for health expenses. Funds reimbursed from HRAs are not taxable.
HRAs began as a way for employers to control medical expenses. An employer would offer high deductible insurance plans to employees and use the premium savings toward a contribution to a Health Reimbursement Account. The employees could then use the account to pay medical expenses such as co-pays, deductibles, dental expenses, vision expenses, etc. An added bonus is that the funds can be carried over from year to year.
HOW FLEXIBLE ARE HRAS?
Although the plans must follow IRS Code Sections 105, 105(H), and 106, employers are allowed flexibility in how the plans are designed. For example, an employer could limit the types of expenses employees may be reimbursed. Employers may tie the HRA to a medical insurance choice, or employers may use the HRA in place of a dental or vision plan. Employees may contribute funds to the HRA, but the funds would need to be deducted from pay AFTER tax and a trust would need to be established. Therefore, all funds contributed to the plan should be from the employer only.
DIFFERENCES BETWEEN AN HRA AND A MRP
There are a lot of similarities, especially since both plans are to reimburse the employee for expenses. However, it is important to remember that the HRA is funded by the employer, while the Medical Reimbursement Plan is employee-funded. Another major difference is that the HRA, if set up to do so, can have its unused funds rolled over from year-to-year, while an MRP cannot.
CONSUMER DRIVEN HEALTH CARE PAVES WAY FOR BENNY™ CARD
Demand for reduced health care premiums and direct control over accounts has led to an innovation called the Benny™ Card. With the ability to provide a real-time interface to consumers, the Benny™ Card provides the versatility and control consumers are looking for. Up to five accounts can be controlled by one card, and transfers are made automatically between pre-tax flex and health reimbursement dollars or spending accounts and to the medical or dependent care provider.
INCREASED TAX SAVINGS & REDUCED OUT-OF-POCKET EXPENSES
Companies are choosing Benny™ Card because of the increased tax savings. When newly introduced to a company, the Benny™ Card boasts increased employee participation rates of up to 40%, thereby creating tax savings for employers and employees. Because payment is automatically transferred to the provider when the card is used, there are no transmission or credit card fees to contend with. Each time the card is used, the member’s card balance is automatically reduced.
COMPREHENSIVE EMPLOYER SOLUTIONS
To save more time and money, many employers look to full-service agencies to handle their payroll, flexible benefits, and recruitment needs. PayrollAmerica is a leading full service payroll bureau offering state-of-the-art payroll, flex-benefit, and recruitment solutions. To learn more about the Benny™ Card and PayrollAmerica’s other product offerings including flexible spending plans visit their website at www.payrollamerica.com or call (800) 375-8997.
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Contact
PayrollAmerica
Chris Barrera, Dir. of Operations
(800) 375-8997
www.payrollamerica.com
Chris Barrera, Dir. of Operations
(800) 375-8997
www.payrollamerica.com
Contact