Health Care Accounts
There are three main types of health care accounts that employers can provide or offer as part of their employee benefits package that helps employees lower the costs of health care expenses including but not limited to insurance plan copays, deductibles, coinsurance and prescription drug costs. This includes expenses not covered under health, dental, and vision insurance plans.
Additionally, variations of these accounts can also help employees save on their dependent day care costs and transportation expenses as well as reimbursement for individual insurance plan and Medicare supplement plan premiums.
The 3 types of health care accounts are listed below with additional details as you scroll down this page.
- Health Reimbursement Account (HRA) - employer funded only
- Health Savings Account (HSA) - employer and or employee funded
- Flexible Spending Account (FSA) - employee funded only
Attract, Recruit, and Retain the Best Employees.
To bring in top talent, employers need to offer health benefits programs that empower employees to save and prepare for future medical expenses. 208benefits has partnered with highly rated health care account administrators to help your business affordably and simply manage these accounts for you and your employees.
Because these spending and savings accounts are tax-advantaged, you’ll save up to 7.65% in payroll taxes for every employee that participates.
Health Reimbursement Account (HRA)
Give your employees the control and flexibility they need to combat the rising costs of healthcare. HRAs are employer-funded tax-advantaged accounts, designed to help employees save money on the costs associated with healthcare.
HRAs can be comprehensive or limited purpose for example a comprehensive HRA may be a set dollar amount that the employer provides their employees to coverage any type of out-of-pocket costs for medical, dental, vision, or prescription drugs whereas a limited purpose HRA may only be used by employees applied to their medical insurance plan deductible often referred to as a ‘deductible buy-down’. The employer goal is to save money on higher insurance plan premium costs while still providing employees lower out-of-pocket expense exposure.
Additionally, HRAs can be used to reimburse employee individual insurance plans purchased on the state of federal individual health insurance exchange or for employees that are Medicare eligible for their Medicare supplement insurance premiums.
Health Savings Account (HSA)
Empower employees to invest in themselves, their health, and their future.
HSAs are designed to be used in conjunction with a high-deductible health plan (HDHP). A HDHP is defined in 2021, as a health insurance plan with a minimum $1400 deductible built as an HSA eligible plan, no insurer coverage until the deductible is met.
The ‘health savings account’ is an actual tax-advantaged bank account that allows employees to set aside pre-tax funds to pay for qualified medical expenses incurred by themself, their spouse, and any tax dependents covered under their HDHP. And since any contributions made are taken out of the employee’s taxable income, the employer will realize potential tax savings in addition to the money they are already saving by offering an HDHP plan.
The annual maximum contribution for 2021 is $3600 for an individual & $7200 for families.
$1000 'catch up' contribution is allowed for account holders 55 and over.
Flexible Spending Account (FSA)
Because FSAs are set up as a tax-advantaged account, participants can save up to 40% on thousands of eligible everyday expenses*. The best part for employers? Since contributions are taken out pre-tax, the taxable incomes of those that participate are reduced -- providing employers with a tax-saving opportunity equal to that of the tax on the employee’s payroll deduction.
There are 2 types for FSAs: Healthcare & Dependent Care
Healthcare FSA -
- A healthcare flexible spending account (FSA) is a smart and easy way for employees to save money on their identified health care expenses such as known monthly doctor visits or prescription drugs, planned procedures including medical, dental, and vision. The healthcare FSA is designed to be a 'spending' account therefore it has a $500 unused funds roll-over limitation, otherwise a 'use it or lose it' account. Unused funds are forfeited to the employer to off-set any employer paid administration fees of loss of funds due to employee termination.
The annual maximum contribution for 2021 is $2750.
Dependent Care FSA -
- To be able to work every day, many of your employees likely rely on day care or home aide services to care for their loved ones. Help lessen the financial burden of these services, while realizing major tax savings, when you offer your employees use of a dependent care account (DCA). Eligible expenses include day care, before and after school programs, in-home care for a dependent child or dependent elderly adult, as well as nanny, nursery school, or pre-school expenses.
The annual maximum contribution $5000.
All healthcare accounts have limitations and exclusions that need to be reviewed by employer and employee before setting up or enrolling in any account options. With our partners, we will help guide you and your employees to proper use of these valuable account options.