pre-tax
The state of Illinois has passed a law known as the Transportation Benefits Program Act which will require some employers in the Chicago metropolitan area to offer pre-tax transportation benefits to their employees.
Cafeteria Plans allow employees to elect “qualified benefits” offered by their employer, and those qualified benefits may be paid for with pre-tax contributions by employees. Employees generally save on state income taxes, federal income taxes, and FICA taxes (i.e., Medicare and Social Security taxes). Employers also reduce their FICA taxes when a Cafeteria Plan is in place, so it is usually a win-win for all parties.
Posted April 21st, 2020 in Employers, Producers, Individuals
Health Savings Accounts (HSAs) have been available since 2004. Employees and individuals enrolled in qualified high deductible health plans (HDHPs) can put money into an HSA to pay for medical expenses at a later date. The contributions are tax-deductible, and if money is used to pay for medical expenses, the money can be withdrawn from the HSA tax-free. Unlike Flexible Spending Accounts (FSAs), there is no cap on the amount of money that can be rolled over from one year to the next.
Posted May 24th, 2018 in Employers, Producers, Individuals
Why employees should max out their HSA contributions
Most people don’t think about an HSA as a savings account. Instead, they think of it as an account used to set aside money, tax-free, to pay for healthcare expenses. While this is true, the reality is an HSA is much more than a bank account. It’s a long-term savings vehicle.
To offer an FSA, or not to offer an FSA, that is the question. Let’s just cut right to the chase.
Flexible Spending Accounts (FSAs) are a great way for employees to save on taxes for medical and dependent care expenses, but employers also receive financial benefits by offering an FSA.
Flexible Spending Accounts (FSAs) are one of the few benefits an employer can provide that often pays for itself (and then some). While there are expenses that will be incurred by the employer when using a third-party administrator for the FSA, there are also payroll tax savings that will offset some or all of those expenses.
Group health plans typically make coverage available to current or former employees and their spouses and children. However, some employers extend coverage to certain groups of non-employees. The most common example would be letting a business owner participate in the plan. Most types of business owners aren’t classified as employees for tax purposes, but rather they are said to be self-employed.
In the first part of this series, we discussed how everyone from insurance companies to employers has been affected by the Affordable Care Act (ACA), but no group more so than employees - the true healthcare consumer.
Since the Affordable Care Act (ACA) took effect, Flex has been following closely as the market transitions further away from traditional healthcare concepts. The following is the first piece in a three-part series that addresses key industry issues, trends and solutions related to Consumer-Driven Accounts (CDAs).
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