As small employers are looking for ways to contribute to employee health costs outside of a traditional group health insurance policy, an option is to offer a health care account before taxes. There are several health plans account-based available, each offering unique features and benefits.
When evaluating whether and how to offer employees an account before taxes health care, the first step is to understand the options available and how they work for your company and employees.
What is a Healthcare before tax account?
an account of the pre-tax health is simply a way to give employees tax free money (or refund tax free) for care fees health. There are several different types available, each with unique rules regarding contributions, distributions, maximum and expenses of qualified health care. pretax health accounts can be offered alongside a group health insurance plan, or in many cases offered as the main system of health benefits -. Instead of traditional health insurance
What are the different types of pre-tax health accounts
The most common forms are :?
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health savings accounts (HSA)
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health reimbursement arrangements (HRA)
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health reimbursement plans (HRPS)
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health flexible spending accounts ( RTA)
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premium only plans (POPs)
health savings accounts ( HSA)
HSA are individual bank accounts belonging to employees that allow the payment tax free or reimbursement of eligible medical expenses. The employer usually provides HSA alongside a high deductible HSA qualified health plan. For 2015, the HSA contribution annual limit for one person is $ 3350 (see: HSA 2015 rules).
health Arrangements reimbursement (HRA)Health Reimbursement Arrangements (aka Health Reimbursement Accounts or CRH) are schemes 'funded employers used to reimburse employees for qualified medical expenses tax free.
CRH are usually paired with high-deductible health insurance plan to reimburse employees for their deductible expenses.
In some situations, CRH can be offered as a benefit to the independent health used to reimburse employees for insurance premiums eligible individual health and / or medical expenses out of pocket . (limitations In 2014, the health reform has placed on the use of CRH Stand-alone for many employers. Yet available standalone CRH CRH Types include retired and one independent person CRH.)
health care reimbursement plans (HRPS)health care reimbursement plans (HRPS) are employer plans financed used for non-taxable reimbursement of individual health insurance premiums. HRPS are specifically designed to comply with the new health reform rules and regulations. HRPS are a type of Section 105 plan reimbursement of medical expenses.
Health Flexible Spending Accounts (FSA)
Health RTA are established employer benefit plans that allow a tax refund of eligible medical expenses. Most often, the ASF is funded by employees and has an annual maximum of $ 2,500 contribution (see: 2015 limits annual contribution FSA).
Premium only plans (POPs)
a Section 125 Premium Only Plan (POP) is a cafeteria plan that allows employees to pay premiums 'insurance with dollars before tax. Like ASF, POPs are established by the employer but financed by the employee. POPs are less common today because employees can not use them with subsidized health insurance policies purchased by the health insurance market.
How these health accounts compare? Download the free PDF, "HRA HSA vs vs vs HRP FSA Comparison Chart."
What is right for Healthcare account our society?
to help determine what type of account the pre-tax health is good for your business and employees, take these different characteristics:
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may contribute
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Cost of employer contributions
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maximum annual contributions
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allowed medical expenses
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tax treatment
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employee eligibility criteria
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Whether having a system of health insurance company is required
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rollover Fund
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administration / management
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Portability
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accounts Requirement (if applicable) to pre -Funding
for example, with a repayment health care plan (HRP), only the employer can contribute, and no contribution annual maximum. In addition, the employer reimburses the employee for what they use. With HRP, authorized medical expenses are limited to health insurance and basic preventive care premiums.
With a health savings account (HSA), anyone can contribute and the maximum contribution is $ 3.350 for an individual. Unlike a HRP, the employer pays 100% regardless of the use of employees and employees must have a health plan to qualify for the HSA high deductible. Employees can use the HSA for qualified medical expenses, but not on insurance premiums ( , except in limited situations ).
Conclusion
health accounts such as HSA, HRA, ASF, HRPS and POP offer small employers a way to offer health benefits, with or without a traditional health insurance plan. What kind of diet is good for your business? First, understand how each of the pre-tax health care plans work. Next, determine what type of diet will help you achieve your health benefits objectives.
Do you have questions about the health accounts before taxes? Leave a question and we will be happy to respond.
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