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How to Increase Employee Benefits |
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Premium Only Plans redirect, on a pre-tax basis, a portion of the participant's salary to pay for a variety of employer-sponsored insurance premiums. By paying premiums before taxes are taken out of gross wages, employees may actually see their paychecks increase. |
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Flexible Spending Accounts redirect a portion of the participant's paycheck to pay for healthcare, daycare, and adoption expenses. During the year, employees are reimbursed from this account as they incur qualified expenses. Reimbursements to employees are tax-free. |
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Health Reimbursement Arrangements allow an employer-funded account to repay the unreimbursed medical expenses of employees, along with an option to carry unused funds forward. An HRA account may reimburse any or all the same expenses as a Section 125 Flexible Spending Account (FSA). |
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| The IRS divides flexible benefit plans into several categories: Premium Only Plans (POP), Flexible Spending Account Plans (FSA), Health Reimbursement Arrangements (HRA), and Transportation Benefit Programs. | |
| Empower POP, Empower FSA, and Transportation Benefits Programs are tax-savings plans that let employees set aside a certain amount of each paycheck into an account - before paying taxes.
By using tax-free dollars to pay for qualified expenses, employees increase their spendable income and save taxes. Employers save too - about 8% (FICA match) for every dollar that employees contribute to the plan. The Empower HRA plan is funded with employer dollars and reimburses employees' qualified medical expenses on a tax-free basis. Unlike the Empower FSA, where the IRS requires the annual election to be available on the first day of the plan year, only a portion of the Empower HRA limit is added to each account once per month or pay period. An Empower HRA compliments your FSA plan and enhances FSA plan participation levels. Each of these plans has different requirements. Click here to compare HRA, FSA, and Health Savings Account (HSA) plans. |
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