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Tax Preferred Strategies
 

To help your company get the most out of the benefits program you offer, employees should have the option to pay for benefits with pre-tax dollars. To do this the IRS requires you to establish a premium only plan (POP).

  • Group Medical , Dental, and Vision insurance plans

  • Health Savings Account contributions

  • Group term life premiums (under $50,000)

Plus, by helping your employees save, you as a business save too on your FICA responsibilities.

Section 125 Cafeteria Plan

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Flexible Spending Account

Offering a flexible spending account (FSA) to employees can provide a number of advantages. Here are a few of the key benefits:

  • Tax Savings: Contributions to an FSA are made with pre-tax dollars, resulting in savings for both the employer and the employee.

  • Reduced Health Care Costs: FSA can help pay for out-of-pocket expenses, reducing overall cost.

  • Employee Satisfaction: FSA can improve employee satisfaction and retention.

  • Access to Health Care: FSA can make necessary medical treatments more affordable and accessible.

  • Easy Administration: FSA can be administered by a third-party administrator, reducing the burden for employer.

Dependent Care Flexible Spending Account

DCFSAs are tax-advantaged accounts that let you use pre-tax dollars to pay for eligible dependent care expenses. A qualifying ‘dependent’ may be a child under age 13, a disabled spouse, or an older parent in eldercare. The Dependent Care FSA (DCFSA) maximum annual contribution limit did not change for 2023. It remains at $5,000 per household or $2,500 if married, filing separately. The minimum annual election for each FSA remains unchanged at $100.

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Health Reimbursement Arrangement

 

HRAs are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years. The employer funds and owns the arrangement. Health Reimbursement Arrangements are sometimes called Health Reimbursement Accounts and are a great way for employers to enhance the group health plan while paying lower premiums. 

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Health Savings Account

A Health Savings Account (HSA) is a type of personal savings account you can set up to pay certain health care costs. An HSA allows a person to put money away and withdraw it tax free, as long as you use it for qualified medical expenses, like deductibles, copayments, coinsurance, and more. You can only contribute to your HSA when you’re enrolled in a qualified high deductible health plan with no other coverage that disqualifies you. 

Here are a few of the key benefits:

  • Tax Savings: Contributions to HSA are pre-tax, resulting in savings for both the employer and employee.

  • Reduced Health Care Costs: HSA paired with HDHP can help pay for out-of-pocket expenses, reducing overall cost.

  • Long-term savings: HSA funds rollover year to year and can be used for future medical expenses.

  • Compliment Retirement savings: HSA account can be used as complement to retirement savings and can help save for healthcare expenses during retirement.

  • Easy Administration: HSA can be administered by third-party administrator.

  • Encourage Preventative Care: HSA funds can be used for preventive care and diagnostic tests

To qualify for an HSA, you must meet the following criteria:

  • You're covered by a qualifying High-Deductible Health Plan (HDHP).

  • The HDHP is your only health insurance coverage

  • You don't have or use a General Purpose FSA (Flexible Spending Account)

  • No one else can claim you as a dependent on their tax return.

  • You’re 18 or older and not enrolled in Medicare (Part A and Part B) or Medicaid.

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