Flexible Spending Account
A Cafeteria Plan allows employees to pay for their employer-sponsored insurance premiums. The employer may also implement a Flexible Spending Account into the Cafeteria Plan which allows employees to be reimbursed for expenses like deductibles, coinsurance, co-pays, prescription drugs, vision expenses, dental expenses, day care services and privately owned dental or vision insurance policies.
Even the most comprehensive insurance policies have out-of-pocket expenses. FSAs can help your employees save on these expenses.
Similar to a Premium Only Plan, a Flexible Spending Account permits pretax payment of insurance premiums and also offers three additional benefits to employees:
Health Flexible Spending Accounts
Employees use payroll withholding of pretax dollars to pay for a out-of-pocket medical expenses.
Dependent Care Flexible Spending Accounts
Employees use payroll withholding of pretax dollars to pay for work-related expenses associated with care of a live-in dependent, such as a child or elderly relative.
Premium Reimbursement Accounts
Allow employees to set aside the costs of premiums with a private insurance company on a pretax basis. Premiums are only eligible if the insurance policy is carried individually and is not a medical policy. Dental & Vision policies are eligible.
Flexible Spending Accounts encompass all the aspects of a POP plan with these additional value-added services:
- Case setup/Employee Communication
- Online / Onsite Enrollment
- Claims Submission to UPA
- Claims Adjudication tailored to employer schedule
- Payments via EFT or check
- Online Participant Inquiry and reporting
- Online Employer Module and reporting
By implementing an FSA into your Cafeteria plan you can reduce your employees taxable compensation. You are also giving employees a way to pay for out-of- pocket medical expenses, work-related daycare expenses and privately owned insurance policies.
The use it or lose it concept can be intimidating when deciding to enroll in the FSA. The IRS now allows a Carryover provision that allows up to $500 of the Health FSA to be carried over from one plan to the next if not used.