What is an FSA?
Flexible Spending Accounts (aka FSA) are part of the IRS Section 125, also known as a cafeteria plan.
FSAs are an employer-sponsored benefit that allows employees to set aside money on a pre-tax basis for qualified medical and/or child care expenses.
The IRS regulates what services or purchases are eligible under Section 125. Each benefit under Section 125 has maximum contribution limits and guidelines for when elections can change.
There are two overall types of FSA’s, Medical and Dependent Care.
Medical FSA’s covers things like your insurance deductible, co-payments, coinsurance, prescriptions, dental and or vision expenses.
Dependent care FSA’s cover certain expenses to care for dependents while the legal guardian is at work. While this most commonly means child care, for children under the age of 13, it can also be used for children of any age who are physically or mentally incapable of self-care.
What is an HSA?
Health Savings Accounts (aka HSA’s) are a tax savings account that is only available if it is paired with a qualified high-deductible health plan (HDHP).
IRS Publication 502 contains a list of all approved qualified medical expenses. An HSA can be used to cover: your insurance deductible, qualified health care expenses, co-payments, and coinsurance.
There are many more restrictions to who is qualified to have an HSA account, please consult with your benefits advisor for the current rules and regulations.
HSA’s are increasingly being used as an additional resource to invest and save for retirement. HSA’s have many of the same tax advantages as IRAs. You’re not limited to keeping your HSA in cash; there are often investment options after a monetary threshold.
What are Commuter Benefits?
Our commuter benefit programs can help you and your employees save money on the daily commute to work. It is a very effective method of saving taxes and also offers money-saving solutions to the daily commute.
Our policies can help reduce costs for employees who use mass transportation or pay to park their cars at work.
As an employer, our transportation insurance does not require any cash contributions from you. It works by allowing employees to convert their after-tax payments for commuting expenses into pre-tax payments.
There are tax benefits for the employer as well – with lower annual employment tax liabilities.
Employees can fund the account with pre-tax contributions, which are exempt from federal income taxes, Social Security taxes and, in most cases, state income taxes.
This results in an average tax savings of 30% on eligible expenses.