Comprehensive and affordable FSA and HRA account administration.
FSA (Healthcare & Dependent Care)
With tax advantages for both the employer and the employee, Section 125 of the Internal Revenue Code allows employees to fund a Health Care Flexible Spending Account – a method of developing a spending account to pay for certain out-of-pocket healthcare or dependent care costs on a pretax basis.
By sponsoring Flex Spending Accounts (FSAs), you offer a win-win situation for both you and your employees. By allowing your employees to allocate pre-tax earnings to specific savings accounts designated by the IRS, you help reduce FICA tax for both of you.
Commuter Benefits
As fuel costs continue to be high, employees are looking for ways to save on their commutes to work. Transportation Reimbursement Accounts are a valuable employee benefit as they help employees save time and money when they use public transit for their commute to work. Plus, they help save the environment.
QTAs allow employees to set aside pre-tax funds used for eligible transit and parking expenses related to commute to work, governed by IRC Section 132.
Elections and Spending
- IRS sets maximum monthly pre-tax deduction and spending and adjusts annually; these limits reflect the maximum allowed pre-tax contribution and reimbursement amounts per calendar month.
- Unused amounts can be carried over.
- Contributions are available for reimbursement based on payroll deduction cycle (like Dependent Care).
Using the card for Parking
When the participant uses the Card for parking expenses, there’s no paying cash up front, no claim forms to fill out and no waiting for reimbursements. The Card helps with qualified QTA expenses such as parking expenses for any type of vehicle at or near the participant’s work location or at or near a location from which the participant commutes using mass transit.
Transit
The Card can be used for mass transit passes, tokens, or fare cards purchased at a valid transit fare terminal.
Benefits to Participants
The Card program offers the following advantages for the participant:
- Tax Savings – The IRS allows a monthly maximum of $130 for transit and $250 for parking per month to be deducted from an employee’s pay before taxes, which can mean substantial tax savings.
- Ease of Use – The Prepaid Benefits Card is easy to understand, convenient and provides an automatic way to pay for qualified transit expenses.
- Flexibility – Participants are able to use a secondary form of payment when the purchase exceeds their monthly election.
HRA Administration
HRA accounts can pay the same expenses as a Section 125 Medical Reimbursement Flexible Spending Account (FSA), however, unlike an FSA only employers can contribute to the HRA.
Expenses not reimbursed by health insurance are one way employer groups are utilizing HRAs. With an HRA, the employer funds an account from which the employee is reimbursed for qualifies medical expenses, such as co-pays, deductibles, vision care, prescriptions, long-term care, medical insurance, chiropractic care, and most dental expenses. Over-the-counter drugs that are medically necessary may also be reimbursed through an HRA. Reimbursements are not taxed to the employee, and are deductible by the employer.
HRAs provide employers with a lot of flexibility in Plan design. Limits can be set on types of services reimbursed by an HRA. Amounts contributed to an HRA can be in a lump sum or in increments throughout the year. You can also choose to carry over unused funds to the next plan year, or have all or a portion of the unused funds forfeited at the end of the year.
Want to Offer a Reimbursement Plan?
Contact BRMS today to learn how we can help you develop a health reimbursement account to suit your company’s specific needs.