What are Flexible Benefits?
Flexible Benefits are an opportunity for Employers and their Employees to save taxes on
health insurance premiums and other family costs. There are several types of Flexible Benefits
that are authorized under the Internal Revenue Code. Such benefits may be offered through
pre-tax payroll deductions or employer funded for the employee on a pre-tax basis.
This means Employees do not pay state, federal or FICA taxes on these amounts and the
Employer saves the matching FICA. Thus, they are win-win benefits giving employees more
spendable income while yielding a net positive impact on the employer's bottom line.
Why Offer Flexible Benefits to Employees?
In these challenging times of rapidly escalating health insurance premiums without
creative solutions, employers are forced to choose between absorbing the increased
cost or cutting benefits. Flexible Benefits help employers mitigate insurance
premium increases, while maintaining the quality of benefits for their employees.
They provide a creative opportunity to customize benefits and to address specific needs.
They also encourage employees to be pro-active with their health needs rather than
avoiding preventative care as is a common result of cost-shifting or cutting benefits.
What are the different types of Flexible Benefits?
- Section 125 Cafeteria Plans
may contain several types of accounts, including
medical expense reimbursement, childcare reimbursement, and payroll savings for insurance premiums.
The Employer keeps any and all unused funds after the plan year.
- Section 132 Parking & Transit Plans
offer your employees an option
to help control their transportation costs by electing pre-tax payroll deductions. This is a month to
month benefit, which offers flexibility and significant savings.
- Health Reimbursement Arrangements (HRA)
are always funded by the
Employer for specific types of the expenses. HRAs allow employees to carry forward unused benefit dollars
from year to year.
How does an Employer decide which type of benefit to offer?
Flexible Benefit Plans may be customized for any groups' specific needs and goals.
Therefore, Employers can look at the overall benefit package available to their employees and
evaluate where the gaps in coverage have developed or which benefits are under-utilized at
great to the cost to the Employer. ANI will gladly assist you or your broker to craft a
custom solution to meet the needs of you and your employees.
What are the risks to an Employer?
While most Flexible Benefits offer no risk to an Employer, some types do include inherent risks.
However, by customizing the benefits package to offer only those plans that will assist you
and your employees, such risks can be greatly reduced. In fact, most employers experience
significant savings year after year by offering Flexible Benefits to their employees.
Our goal at ANI is always to ensure that the benefit plans we administer truly are beneficial to our clients.