What is a Flexible Benefits Plan? A welfare benefit providing employees the opportunity to set aside a certain amount of their paycheck into an account to pay out-of-pocket medical, daycare and other qualified medical expenses on a tax-free basis.

What are the benefits of a Healthcare Reimbursement Account when health insurance is already available?
This account shelters these dollars from taxes giving employees more buying power for every dollar paid. It is also used to pay for expenses not covered by insurance. For example annual physicals, co-payments, eye exams, glasses, orthodontics, prescription drugs, and hospital care to name just a few.

If employees set aside part of their pay, will they make less money? No, the net take home pay will increase by the amount of taxes that were not paid.  For instance, if an employee has a paycheck of $500 and they contribute $100 to the cafeteria plan, they will only be taxed on $400 of their paycheck.

What are the benefits of participating?
The biggest advantage is the tax savings! Every dollar set aside in the account reduces income taxes, and reimbursements will be distributed for qualified expenses your employees are already paying for!

How are expenses reimbursed?
Simply by completing a claim form and attaching a copy of the healthcare or dependent care bill. The plan administrator pays all claims directly to the employee due to privacy and compliance.

What if not all of the money set aside in the account is used?
The participating employees should carefully review their estimated expenses before making the decision of how much to elect. Any contributions that are not used during the plan year may not be paid in cash or used in a later plan year. If an employee terminates employment, they may request reimbursement for services provided prior to termination.

What if an employee is not covered under the company's health insurance plan?
Good news! The employee and their family can still participate in the Healthcare or Dependent Care Reimbursement Accounts.

Are there any negatives to be aware of?
Yes, because the participating employees are not paying social security tax on that portion of their income that has been redirected, their social security benefits may be slightly reduced.

Similar to the Archer Medical Savings Account (MSA), were created to combat rising medical costs.

Benefits

• Contributions are tax deductible
• Earnings are tax-deferred
• Assets are never taxed if used for qualified medical expenses
• Unused assets may be used for retirement
• Upon death, assets become property of the named beneficiary

Qualified Medical Expenses are considered actual medical expenses such as doctor visits, prescriptions, transportation to get medical care & dental care. Other qualified expenses would be long-term care insurance, healthcare coverage when unemployed, certain continuation-of-benefit healthcare coverage and certain health insurance after age 65.

Who is Eligible to Participate?

• Covered under a High Deductible Health Plan (Annual deductible of $1,000 for self $2,000 or more for family with out of pocket expenses not exceeding $5,000 for self and $10,000 for family)
• Are not also covered by any other health plan that is not an HDHP
• Are not entitled to benefits under Medicare (generally, not yet age 65)
• Are not able to be claimed as a dependent on another person's tax return

Advantages for Employers: An HDHP generally has modest premium costs that may be effective in lowering expenses. The HSA also serves a dual purpose, providing for both medical and retirement expenses while protecting the employer against catastrophic healthcare expenses.